There have certainly been many times during my career when I have had people ask me about the “nanny tax.” Those people (not surprisingly) usually have nannies, and are aware that there are some tax responsibilities that come along with employing that person.
There have certainly been at least as many times in my career, though, when someone should have been asking me about this “nanny tax,” and were not. Those people (not surprisingly) did not have nannies, and were not aware of the responsibilities that come with having a household employee. Many of them, in fact, were not even aware that they technically had a household employee.
Although nannies are the occupation that have somehow been chosen to name and symbolize this issue, it essentially applies to anyone who works in your home to whom you pay more than $2,000 a year. Cooks, housekeepers, medical care givers, gardeners, and heck, even babysitters who don’t get the nanny tag could all fit under this umbrella.
So if you are reading this and realizing that there may be some legal and tax issues that you have not been properly addressing, please don’t hesitate to contact us and we can help make sure that you are meeting your obligations.
I wanted to spend a little more time here keying on the medical worker aspect of this, however. Many people who receive in-home care arrange it through a third party, meaning the caregiver is receiving their wages through an employer who is not the homeowner of where they work. If that is the case, there is no need to worry, for they already have an employer taking care of obligations on that end.
When a homeowner personally brings in someone, however, then they become the employer and as such have the tax obligations of any employer. Some believe that with the current, possibly in-flux state of medical insurance in our country that this could be a situation that grows in the coming years.
This may actually be the type of situation where it is most critical that one is aware of the “nanny tax,” even though these clearly are not nannies, and of other rules that could help ease one’s tax burden.
For example, a worker could qualify for a companionship exemption based on the type of care they provide, leading to possible exclusions from minimum wage and overtime rules. There are also sleep time exemptions for those who work certain extended hours if adequate sleeping facilities are provided, continuous sleep for at least five hours is possible, and the employee agrees to it in writing, so that those hours don’t count as working hours.
I realize that all of this may seem very vague, and that is by design.  I do not feel that this is the space to give any sort of specific instructions, recommendations, or advice, however, for so much of that is dependent on one’s personal situation. Instead, I just wanted to make you aware that such rules do exist and it is better to take care of them now than waiting for them to catch up with you.
And of course, as always, we would love the chance to help you figure out just how it applies in your personal situation. 

The other day, the New York Times ran a story that spoke to one of my favorite topics: keeping our minds clear.

The subject was the seemingly endless barrage of news stories about the current administration, and the challenges of navigating your mind to be free of it all.

Whomever you voted for, whatever your political persuasion (and I'm making a point here that transcends politics, however fascinating or dire they might be at the moment) -- perhaps one of our greatest challenges in this cultural moment is retaining our focus on what truly makes our hearts come alive.

I'm not suggesting that you keep your head in the sand -- but that you be mindful of what you're feeding your mind upon. 

Because right now, the world is SWIMMING in negativity. And you need to be serious and proactive about protecting yourself from it. Because -- if you don't -- it'll kill your career, kill your business, kill your dreams and everything you really care about.

The mass news media is NOT your friend. Neither are these ever-increasing niche-oriented outlets who yell with (and at) their particular choirs and point out the massive failures of "the other side".

They feed on fear, and they sell paranoia, division and hyperbole. It's what they do.
And not only must you protect YOURSELF from this drip, drip, drip of chaos and depression, you need to fight it on behalf of your co-workers, your friends and (especially) your children and family.

Now then. Let's move to something a little lighter -- and more oriented around what you can actually control: your finances, specifically your financial records.

So, speaking of keeping ourselves clear...

Nicole Odeh's 
"Real World" Personal Strategy Note
Odeh's Guide To Keeping Records
"Our lives are frittered away by detail; simplify, simplify." -Henry David Thoreau

With spring in full swing, let's apply those cleaning instincts to our financial world one of these days, shall we? 

This is a guide I send out every so often, because even in the days of cloud document storage, it's important to have hard copies lying around -- in a safe place, of course. If you don't have a full safe, these are the sort of documents for which you may want to invest in a fire safe, at least.

But here is what you should consider for how long to keep them ... and which ones you can safely trash.

Taxes: Seven years
Odeh's Reasons Why:
There are three, actually:

1) The IRS has three years from your filing date to audit your return if it suspects good-faith errors.
2)  The three-year deadline also applies if you'd like to make some sort of amendment because you discover a mistake in your return and can claim a refund.
3)  The IRS has six years to challenge your return if it thinks you under-reported your gross income.

All this adds up to keeping that info for seven years. Beyond that, there's no reason -- except for posterity.

IRA contribution records: Permanently
Odeh's Reasons Why:
You'll need to be able to prove that you already paid tax on this money when the time comes to withdraw.

Bank records: Usually just one year
Odeh's Reasons Why:
Those related to your taxes, business expenses, home improvements and mortgage payments will obviously need to be included for next year's taxes. But unless there is some sort of emotional or posterity reason, get rid of everything after one year.

Brokerage statements: Until you sell
Odeh's Reasons Why:
To prove whether or not you have a capital gain or loss for tax purposes; after this point, shred it.

Household bills: From one year to permanently
Odeh's Reasons Why:
When the canceled check from a paid bill has been returned, you can shred the bill with a clear conscience. However, bills for big purchases -- such as jewelry, rugs, appliances, antiques, cars, collectibles, furniture, computers, etc. -- should be kept in an insurance file for proof of their value in the event of loss or damage.

Credit card receipts and statements: 45 days/Seven years
Odeh's Reasons Why:
Some families don't even bother to match up their statements, but if you do so, shred the receipts once you've verified everything. There's no reason to keep everyday receipts beyond this point. For tax-related purchases, you need only keep the statements for seven years -- after that, shred it, baby!

Paycheck stubs: One year
Odeh's Reasons Why:
This is to verify that when you receive your annual W-2 form from your employer, the information from your stubs match. If so, shred all of the stubs ... if not, request a corrected form, known as a W-2c. After that's been handled -- shred.

House/condominium records: Six years/permanently
Odeh's Reasons Why:
You'll want to keep all records documenting the purchase price and the cost of permanent improvements -- such as remodeling, additions and installations as well as records of expenses incurred in selling and buying the property, such as legal fees and your real estate agent's commission, for six years after you sell your home.

Holding on to these records is important because any improvements you make on your house, as well as expenses in selling it, are added to the original purchase price or cost basis. Therefore, you lower your capital gains tax when you sell your house. ​