 Article Highlights:
Whether a household worker is considered an employee depends a great deal on circumstances and the amount of control the person hiring has over the job and the hired person. Ordinarily, when someone has the last word about telling a worker what needs to be done and how the job should be done, then that worker is an employee. Having a right to discharge the worker and supplying tools and the place to perform a job are primary factors that show control. Not all those hired to work in a taxpayer’s home are considered household employees. For example, an individual may hire a self-employed gardener who handles the yard work for a taxpayer and others in the taxpayer’s neighborhood. The gardener supplies all tools and brings in other helpers needed to do the job. Under these circumstances, the gardener isn’t an employee and the person hiring him/her isn’t responsible for paying employment taxes. The same would apply to the pool guy or to contractors making repairs or improvements on the home. Contrast the following example to the self-employed gardener described above: The Smith family hired Lynn to clean their home and care for their 3-year old daughter, Lori, while they are at work. Mrs. Smith gave Lynn instructions about the job to be done, explained how the various tasks should be done, and provided the tools and supplies; Mrs. Smith, rather than Lynn, had control over the job. Under these circumstances, Lynn is a household employee, and the Smiths are responsible for withholding and paying certain employment taxes for her and issuing her a W-2 for the year. If an individual you hire is considered an employee, then you must withhold both Social Security and Medicare taxes from the household employee’s cash wages if they equal or exceed the $2,000 threshold for 2016. The employer must match from his/her own funds the FICA amounts withheld from the employee’s wages. Wages paid to a household employee who is under age 18 at any time during the year are exempt from Social Security and Medicare taxes unless household work is the employee’s principal occupation. Although the value of food, lodging, clothing or other noncash items given to household employees is generally treated as wages, it is not subject to FICA taxes. However, cash given in place of these items is subject to such taxes. A household employer doesn’t have to withhold income taxes on wages paid to a household employee, but if the employee requests such withholding, the employer can agree to it. If income taxes are to be withheld, the employer can have the employee complete Form W-4 and base the withholding amount upon the federal income tax and FICA withholding tables. The wage amount subject to income tax withholding includes salary, vacation and holiday pay, bonuses, clothing and other noncash items, meals and lodging. However, meals are not taxable, and therefore they are not subject to income tax withholding if they are furnished for the employer’s convenience and on the employer’s premises. The same goes for lodging if one additional requirement applies—that the employee lives on the employer’s premises. In lieu of withholding the employee’s share of FICA taxes from the employee’s wages, some employers prefer to pay the employee’s share themselves. In that case, the FICA taxes paid on behalf of the employee are treated as additional wages for income tax purposes. A household employer who pays more than $1,000 in cash wages to household employees in any calendar quarter of either the current or the prior year is also liable for unemployment tax under the Federal Unemployment Tax Act (FUTA).” Although this may seem quite complicated, the IRS provides a single form (Schedule H) that generally allows a household employer to report and pay employment taxes on household employees’ wages as part of the employer’s Form 1040 filing. This includes Social Security, Medicare, and income tax withholdings and FUTA taxes. If the employer runs a sole proprietorship with employees, the household employees’ Social Security and Medicare taxes and income tax withholding may be included as part of the individual’s business employee payroll reporting but are not deductible as a business expense. Although the federal requirements can generally be handled on an individual’s 1040 tax return, there may also be state reporting requirements for your state that entail separate filings. If the individual providing household services is determined to be an independent contractor, there is currently no requirement that the person who hired the contractor file an information return such as Form 1099-MISC. This is so even if the services performed are eligible for a tax deduction or credit (such as for medical services or child care). The 1099-MISC is used only by businesses to report their payments of $600 or more to independent contractors. Most individuals who hire other individuals to provide services in or around their homes are not doing so as a business owner. Please call this office if you need assistance with your household employee reporting requirements or need information related to the reporting requirements for your state.  When I quit smoking some years back my appetite for food picked up and I started to pack on the pounds. So I took up jogging to get in better shape. But that had its own problems; running can really beat up your body - your feet, your knees, your hips. So I cast about for something a little safer, and came up with bicycling. Granted, it doesn’t deliver quite the same level of cardiovascular workout that jogging affords. But it can still be a pretty decent workout, and it’s a decent way to see the countryside. There are plenty of safe, low-impact exercise and physical conditioning routines you can take up to maintain a healthy lifestyle. Take walking, for instance, the low-impact response to jogging. England’s Stroke Association figures a daily 30-minute walk cuts your risk of a stroke by a quarter. It lowers your level of LDL (bad) cholesterol, while boosting HDL (good) cholesterol. It strengthens your heart, helps you lose weight and elevates your mood and energy level. More and more communities are incorporating bike and walking paths into their development plans, so you have a way of getting around that doesn’t tangle with cars. But if you live outside the Sun Belt you might be wary of setting out along any pathway on a snowy, freezing January day. That’s where shopping malls come in handy, as they welcome walkers, especially in the mornings. And gyms seem to be everywhere these days, so when a mall won’t do, there’s always a tread mill nearby. Gyms also offer a wintertime substitute for biking – a stationery bike. A lot of gyms offer elliptical trainers, which more or less keep your whole body in motion as you constantly peddle while moving your arms back and forth on poles attached to those pedals. Most ellipticals have a tension controller, so you can adjust the pedals and arms to offer more resistance for a more strenuous workout. And all the while, your feet never leave the pedal, so you’re not banging up your hips or knees. But why stop there? Rowing machines, though not as common, offer a great workout. They’re sort of a sitting-down version of an elliptical, since they keep most of your body in continual motion. Likewise, they have tensioners that allow you to adjust the difficulty level of the exercise. You’ll also find a lot of helpful resistance in water. And swimming offers a great way to exercise at a very low impact level, because of the bouyance effects of water. And then there is yoga. I always thought of it as more of a mental and spiritual exercise. Granted, there are those components, but you can also find a yoga class that will provide quite a lot of physical exertion, as well. My daughter amps up her yoga instruction with a class in hot yoga. Here, they crank up the thermostat in the yoga room – maybe 100 degrees - so you sweat a lot during a session. You shed not only some unneeded water weight but releasing toxins from your body, to boot. Indoors or out, in a pool or drydocked at a rowing machine, you have opportunities aplenty to tone your muscles, improve your heart health, and safely stay fit.
 The past few years have been an unusual time here in America. Many people lost a large portion of their retirement savings during the economic crash of 2008/2009. Many people took their money out at the bottom and simply didn’t put it back in. The result is that most people just did not save enough money and are now looking for a safety net – something that will protect them when they retire.
Some folks believe that the one “safety net” available to them is Social Security. Unfortunately, what was supposed to be a supplement for many retirees’ final years has now become the only thing keeping their heads above water. That’s not a safety net. Social Security was never meant to be a retiree’s only income. Take a quick look at these statistics: A 2014 “Retirement Confidence Survey” reports that 36% of respondents had less than $1,000 put away for retirement or other needs (my emphasis added)! Only one thousand dollars in savings! Incredible. You may even have seen this report recently in most major newspapers. But, as bad as that 36% figure is – and it is bad – only 20% reported having a thousand dollars put away in 2009 and only 28% just a year ago! It’s not getting better; it’s getting worse and rather quickly at that! So what’s a person to do? It’s really pretty simple. People have to quit messing around – quit believing in the Tooth Fairy – and start looking at guarantees – products that guarantee them a lifetime, realistic, livable income. Everyone deserves and simply must have a safety net. Since you are reading this article, you probably have more than $1,000 put away, but chances are good that you just don’t have the potential retirement income that you’re hoping for. This month’s issue of Safe Money News contains lots of valuable information on how to get to that Promised Land. But, you are not going to have that opportunity to roll the dice if you are within five to ten years of retirement. Folks, it’s time to take some of your money “off the table” and play it safe. Go for that real safety net. I’d encourage you to consider the living benefits of Fixed-Index Annuities. These lifetime income benefit riders are known by a variety of terms: Some companies call them “Guaranteed Income Withdrawal Benefits.” The bottom line is this: Unlike annuitization, this type of rider allows you to take a lifetime income from the annuity without losing control of your retirement asset. You can stop and start at any time, and your account value can continue to grow. The lifetime income rider assures you that you will never run out of money or live too long. And you can get these payout’s either in the Single Life Income or, if you have a spouse at home, you can choose the Joint Life Income. These products also have chronic illness, terminal illness, and confinement waivers that reduce or eliminate some of the most aggravating retirement fears: sickness and chronic and critical illness. It’s odd that one of the simplest products on the market – an indexed annuity with living benefits – is often either misunderstood or just not on many retirees’ radar. The Lifetime Income Benefit Rider along with the Chronic Illness and Confinement Waivers could just be the one product decision that truly provides you with your retirement safety net. Think about it, and then give your Safe Money Places Agent a call for an easy-to-understand illustration about how you can protect yourself and your spouse quickly, easily, and affordably! This article was written by: Raymond J. Ohlson , CLU, CRC, LACP President and CEO of SMP International LLC  My daughter taught herself to read at four years of age and soon was devouring every piece of print in sight, including a grocery store magazine headline that struck her little brain as odd.
“Mommie,” she asked, standing in the checkout line eyeballing the tabloid, “did this man really drink 300 bottles of beer and explode?” No, answered mom, they’re just trying to get you to buy the magazine. This supermarket rag was using what we now call click-bait – offering up a juicy (well, sudsy) bit of completely bogus news in hopes we’d buy the damn thing to read more. Thirty years on, the game remains the same and fake news is thriving. Thanks to a super cheap distribution network - the internet - it now has a global reach. Much of it is benign, banal entertainment meant merely to sell ads. Some of it is malicious, seeking not so much to entertain but to sway opinion. Take a recent item in the “Boston Tribune.” It reported prior to the November election that Michelle Obama’s mother was due to collect a $160,000-per-year lifetime government pension for caring for the president’s two daughters. There was not a shred of truth to that story. It supposedly was sourced from an FOI request but in fact came from a spoof site as there is no news gathering organization known as the Boston Tribune. The Seattle Tribune and Baltimore Gazette are similar spoof sites (though the Seattle Tribune clearly warns readers that they’re entering the world of fiction). So how do you know what’s safe, what isn’t? Well, it can take some sleuthing when there are so many news channels vying for your attention. And it takes a little bit of skepticism on your part to not blindly accept a denunciation from a politician or business person about fake news when in fact the information is merely something he or she disagrees with. Unfortunately, this fake label starts at the top – President Trump. I am not quibbling with his politics, but I can say, as a practicing journalist, that when he calls out CNN for staging fake news he is being a bit theatrical. CNN may be printing or broadcasting news he does not like. But neither they nor Fox, MSNBC nor any of the news outlets who show up for White House press briefings are in the habit of dreaming up news and presenting it as fact. They may occasionally err, but there are consequences (Rolling Stone sued over the 2014 University of Virginia rape story; Janet Cooke canned from the Washington Post after she dreamed up a youthful heroin addict). Look for news from people you’ve always used – your local paper or television channel. Be wary of new websites that pop up in your city. Don’t be lulled into submission by their heavy use of news you might see as non controversial. I spotted one story about a local woman who sold salsa at the farmers’ market suddenly landing a contract for her sauce with a national grocer. They didn’t say where she lived, or the market that launched her to fame. The grocer they named was fictitious. All of this was meant to create an air of authenticity. Do they name their reporters, give you a way to communicate with them, offer subscriptions? Do they carry ads from local car dealers, grocers and merchants, who would be among the first to vett them? Do they carry local news, or daily stories on crime, schools or city hall that would indicate a full-time reporting staff? Television news can be vouched for in general since it’s extremely expensive to set up a network just to play games. Long-known magazines such as Forbes and Bloomberg Business News are truthful. And while magazines, especially, may stray into fiction, they will label it such. And if they are giving an opinion, it’s just that - an opinion. That doesn’t make it fake. This article was written by: Steve Dinnen Mr. Dinnen served as Sr. Business Reporter for the Des Moines Register, Business News Editor for the Indianapolis Star and served as Editor (freelance) for the Christian Science Monitor of its weekly personal finance column |
