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I am a business owner and I spend time talking with other business owners, often about tax stuff. This year, in an obvious huge mistake, I am doing all my own taxes including my business taxes. It's been an eye-opening look into how the sausage is made.
At first, I was worried about small little issues that came up. But I realize now that my accountant constantly fouled things up worse than I ever could. Nothing bad has happened. I did more research and found that only like 0.5% of S-corp returns are audited, and most of those recommend no change. This is remarkable when you consider what the records of the local taco joint must look like.
The reason I bring this up is that many people have too much respect for government rules. Progressives especially like to create a lot of onerous government rules but at the same time refuse to enforce them. The rules are basically impossible to follow. The only reason that the gears of commerce have not ground to a complete halt is because people don't follow the rules.
With that in mind, are the new regulations truly a deal-breaker? Or can you just make a separate credit card for your au pair and then just guesstimate the rest of this stuff. As long as you're not in the worst 1% of au pair families it's probably fine, although this depends on the specific rules obviously.
Out of curiosity, what do you pay yourself as a reasonable wage? I pay myself 2/3 of total earnings and have no idea if that's too much or too little.
It's a complicated formula because you have to take into account QBI. I had been paying myself WAY too much before because of bad advice from my now-terminated accountant. But my current salary is well above what would be considered reasonable.
If you're worried, follow the Kohler Payroll Matrix. According to Kohler, no one has ever gotten in trouble for using it. Most people who get audited are being stupid and paying themselves NO salary, or a tiny one:
https://lifetimeparadigm.com/wp-content/uploads/2020/11/Kohler-Payroll-Matrix-12-01-18.pdf
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We would need to turn in logs to the regional coordinator. The Au Pair system in the US works through Agencies, you cannot get an Au Pair Visa without going through an Agency. That Agency will need to hire extra people to maintain the level of paperwork that will be required of them. Right now we pay our Agency 10k a year to handle the current paperwork to get the Visa, get the Au Pair in country, work with Embassies, and do the legally required checking up on the Au Pair (she meets with our Area Coordinator once a month in person.) It's expected that the cost of the program might double or triple with the changes.
Was this a deliberate department decision? To make this clearly non workable even though it was 'still available'?
No one will pay 30k to follow the rules for an au pair. If you're in the right state im sure that would be the salary.
It's ostensibly to give the Au Pairs a better standard of living, make sure they're getting a "livable wage" (whatever that means when all their food, utilities, phone, and shelter are being paid for by the host family, and the money they receive is on top of that.) Our Au Pairs have always had more spending money than my husband and I have ever budgeted for ourselves.
I see a lot of Au Pairs complain about the new rules. There is a worry that the opportunity will shrink for most Au Pairs. About 2/3 of host families will be priced out of the new rules. The ones that remain will have a large pool to pick from, and will likely pick the most educated with child-care experience. The 19 year old Au Pairs whose child-care experience comes from raising their three younger siblings and seven cousins will be ignored in favor of the 26 year old college graduate with 4 years of pediatric occupational therapy, who really wants to get their foot in America and this is the first step.
Maybe that's actually good for the United States? Smarter, more dedicated people coming in. But it sucks for me. I probably would not have had the fourth kid had I known the Au Pair system would be wrecked a year in.
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Well... that sucks. I still wouldn't make any drastic changes until the rules come into place. It might not be as bad as you fear. And election results might come into play as well.
And, if it's any consolation, my mom was a homemaker and seems to have suffered zero mental slowdown into her mid-seventies.
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