Nobody likes hassling their ex-spouse for child support, reminding other parents to pay their Little League fees or dealing with nanny taxes, the payroll taxes parents who pay a nanny, caregiver or other household employees $2,000 or more per year are supposed to cover. Just as money transfer apps like Venmo have removed the awkwardness of asking a friend to chip in for a birthday dinner or a roommate to pony up for the cable bill, startups targeted at these parental pain points address more specific situations.
[Read: 7 Tax Breaks Every Parent Should Know About.]
Here’s a look at several of these platforms.
SupportPay. Sheri Atwood, founder and CEO of SupportPay, was a child of divorced parents who frequently fought about money. Atwood launched this automated child support payment system in 2013 after her own divorce, when she discovered that the hardest negotiations for divorced parents actually occur after the divorce is finalized. “All the legal professionals leave because after a divorce settlement is finalized, they’re much less involved and it’s up to the parents to manage the child support, medical, education and child care,” she says.
With SupportPay, parents can upload receipts and organize or search by category such as child care, education or medical costs , so the other parent knows the money is going to their kids’ music lessons or doctor bill. Atwood says she’s heard the following from child-support-paying parents: “I have no problem paying; I just want to know that the money is going to my kid and not to my ex and supporting their lifestyle.”
SupportPay also generates a certified record of expenses for court and quarterly tax purposes. “You need this data in order to take action in court or to enforce any orders,” Atwood explains. One or both co-parents can use the free version of SupportPay or the premium version, which starts at $9.99 per month and includes features such as custom categories, multiple payment options and unlimited expenses or payments.
Currently, co-parents using SupportPay can send money using PayPal or record payments made through cash, check or other payment methods. SupportPay also plans to add additional payment methods including bank transfer and Venmo, Atwood says.
“[Co-parenting] is never perfect,” says Emma Johnson, founder of the website WealthySingleMommy and author of the forthcoming book “The Kickass Single Mom.” She adds that neutral third parties such as a therapist or digital tool can reduce tension between co-parents and ensure that transactions run smoothly. “[This way] you’re not arguing over who’s paying what share of the lacrosse registration fees,” Johnson adds.
Groundwork. As the father of four athletic kids, James Bergeron was constantly forgetting to write checks for his kids’ sports teams and then having to drive over to the coach or team organizer’s house to drop off payment or send money via PayPal. So, he and Bill Lennon co-founded Groundwork (originally SportsPay) to alleviate the frustration of paying for uniforms, registration fees and other expenses associated with youth sports. “It’s inconvenient [for parents],” says Lennon. “It’s a huge headache for the teams.”
[See: Your Month-to-Month Guide to Savings.]
Once a sports organization signs up, they can create teams (many larger sports organizations use the software to manage multiple teams), add players and customize payments for each player. “Some players may be on scholarship,” Lennon says. “Some players may get a discount because their mom or dad volunteers. We give them the structure of organizing payments,” he explains.
Parents of youth athletes get an email to register for Groundwork and can view a breakdown of what’s due when. “They can choose to pay everything all right now or if the team organizer has set up payments that are due in the future, they can enroll in auto-pay,” Lennon says. “Groundwork automatically sends email reminders about upcoming payments or past due payments. The whole strategy is to automate the process,” he adds.
Teams pay to use Groundwork, and parents can make a payment from a bank account with no fees or pay credit card processing fees if they choose to use plastic.
NannyPay. Families who pay a nanny or other household employees $2,000 or more annually must withhold money for Social Security and Medicare taxes and pay the employer’s portion of these taxes. Federal and state unemployment taxes are another consideration. The tax rules around household employees can be complex, so NannyPay provides payroll management software to ensure tax compliance. The desktop software is available for Mac and PC, and Bob Dougher, president of Essentia Software Corp., which created NannyPay, says they’re investigating a cloud-based software option.
Dougher feels the software provides peace of mind to household employers and their employees. For instance, if a working parent takes the tax credit for in-home child care but doesn’t report money paid and taxes withheld for a nanny, that could potentially raise some red flags with the IRS.
Paying nannies and others in a tax-compliant manner also gives them verifiable income when they go to apply for a car loan or mortgage and helps qualify for unemployment benefits or Social Security in the future. “Many employees, especially younger nannies, start out thinking that being paid out under the table benefits them,” Dougher says. “There may be a short-term gain in not having to pay taxes, but in addition to it being illegal, you’re not making the family treat you like a professional,” he adds.
For an annual $149.95 subscription, NannyPay generates a detailed pay stub and IRS-compliant forms such as Schedule H (the IRS form for household workers). If users purchase bank-compliant check stock, they can also print checks for their household employees.
[See: 9 Red Flags That Could Trigger a Tax Audit.]
So, is it worth adding another app or software tool to our busy lives? Johnson thinks so. “Everything is going online in our lives and there’s a technological answer to every pain point,” she says.
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3 Payment Platforms for Parents originally appeared on usnews.com
