Care com payroll: Nanny taxes: A complete guide

Nanny taxes: A complete guide

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A overview of how to pay nanny taxes and what the benefits are for doing it correctly

Most families are not tax experts. So when it’s time to hire a caregiver – especially if it’s your first time – knowing all the ins and outs of what the IRS and your state requires can feel confusing and overwhelming. To make this process easier, we’ll break down everything you need to know about household employment taxes, or nanny taxes as they’re commonly called.

• What nanny taxes are
• How to pay nanny taxes
• What the benefits of paying nanny taxes are
• What can happen if you don’t pay nanny taxes
• How much time it takes to manage nanny taxes
   

What are nanny taxes?

The nanny tax is a combination of federal and state tax requirements detailed in IRS Publication 926 that families must manage when they hire a household employee, such as a nanny, senior caregiver or personal assistant. The taxes include:

– Taxes withheld from the employee: Social Security & Medicare taxes (FICA), as well as federal & state income taxes.

– Taxes paid by the employer: Social Security & Medicare taxes, as well as federal & state unemployment insurance.

For the 2022 tax year, nanny taxes come into play when a family pays any household employee $2,400 or more in a calendar year (or $1,000 or more in a calendar quarter for unemployment insurance taxes).

Note: Your obligations will vary depending on where you live. Not all states have income taxes, while others require additional taxes to be withheld from your employee, paid by the employer or both. To see the specific requirements where you live, visit the nanny tax page for your state.

What makes someone a household employee?

According to the IRS, a household worker is an employee if you control not only what work is done, but also how it is done. Generally speaking, that means the employee is coming to your home on the schedule you dictate while following your rules. It doesn’t matter whether the work is full-time or part-time or if you hired the worker through an online platform, they are still considered a household employee subject to taxes if you pay them more than $2,400 per calendar year. Families that misclassify their nanny as an independent contractor by providing a Form 1099 for filing taxes can be charged with tax evasion.

Learn more about why a nanny is almost never considered an independent contractor.

How to pay nanny taxes

Now let’s get into the process of actually managing nanny taxes. There are four main action items that families need to take care of:

1. Apply for Tax ID numbers: You need both federal and state tax identification numbers in order to report your nanny taxes. You can get your federal employer identification number (FEIN) from the IRS and use this number to obtain your state identification number from the appropriate tax agency in your state.

2. Calculate and track payroll: You need to accurately calculate your nanny’s gross pay, the taxes withheld from them and your corresponding employer taxes each pay period. (Use our nanny payroll calculator to help).

3. File tax returns year-round:

   • Typically on a quarterly basis, you will need to file state tax returns. Some states do require monthly or annual filings, so check the details in your area to be sure.

   • You should send 1040 estimated payments to the IRS four times per year.

4. Complete year-end tax forms:

   • You must provide your nanny with a Form W-2 by the end of January each year so they can use it to file their tax return.

   • The Social Security Administration requires you to file Form W-3 and Form W-2 Copy A. This lets them know that you’ve properly withheld FICA taxes from your caregiver and remitted FICA taxes of your own throughout the year.

   • You need to prepare a Schedule H and file it with your federal income tax return.

   • Your state may also require an Annual Reconciliation form, which summarizes the state income taxes you withheld from your nanny.

If you’ve joined Care.com HomePay, we handle all of these procedures and returns for you. Check out how our nanny tax service works.

What household employees need to provide

Before a caregiver begins working for a family, there are three things they need to provide:

1. A Social Security number or an ITIN.

2. A completed Form I-9 with proper identification.

3. A completed federal W-4 form and corresponding state income tax withholding form (if you live in a state with income taxes).

If your employee needs a federal and/or state income tax withholding form, we have up-to-date versions available to download.

What are the benefits of paying nanny taxes?

Both families and their nannies actually benefit from proper tax reporting. Employers may be eligible for tax breaks to offset the cost of their nanny taxes and have less to worry about if they’re audited by the IRS or the state. Caregivers also gain this peace of mind; plus, it’s easier to qualify for short and long-term benefits like:

– Social Security income and Medicare coverage upon retirement.
– Unemployment benefits if they lose their job due to no fault of their own.
– A verifiable employment history necessary for obtaining auto and home mortgage loans.
– Reduced health care costs via subsidies provided through the Affordable Care Act.

What can happen if you pay your nanny under the table?

Here’s a common example of what can happen:

– Your nanny works for you for several years without having taxes withheld or you paying taxes on their wages.
– When your kids are in school full-time, you decide to part ways with your nanny since their services are no longer needed.
– Your nanny files for unemployment benefits and is required to list you as their past employer. The unemployment office reviews the case and finds that you didn’t file any tax returns or pay into the state unemployment insurance fund.
– As a result, your ex-nanny will be refused benefits and you can now expect an audit from the state and the IRS.
– You will end up having to pay back taxes (Social Security, Medicare and unemployment insurance taxes) along with penalties and interest. In some cases, you could be charged with tax evasion and your professional license could be in jeopardy.

How much work will filing nanny taxes involve?

The IRS estimates the average family can expect to spend 50-55 hours per year correctly managing the nanny tax process. This includes all the tax requirements listed above, as well as managing your employee’s payroll and responding to any notices sent by the IRS and tax agencies in your state.

Read more about how to pay nanny taxes yourself.

Our HomePay experts can take care of all the work for you. From handling all the paperwork to actually filing your returns, we take care of everything. If this sounds like the better option for your family, contact our office at (888) 273-3356 or feel free to get started online.

Next Steps:

• Find out how much to pay your nanny
• Download a sample nanny contract
• Use our nanny tax calculator to help set your budget

* The information contained in this article is general in nature, may not be applicable to your specific circumstances, and is not intended to be a substitute for or relied upon as personalized tax or legal advice.

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HomePay Payroll Review | Business.org

HomePay Payroll Review | Business.org
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We dive into HomePay’s pricing, customer reviews, & user-friendliness. We compare it to other nanny payroll providers & find what sets HomePay apart.

HomePay

3.4

• Starting at $75.00/mo.*

• Automatic paycheck calculation

• Automatic payroll tax calculation, deduction, and filing

• Schedule H, Form 1040, Form W-2, and Form W-3 tax filing (addt’l fee)

Data as of 9/1/22. Offers and availability may vary by location and are subject to change.
*Billed quarterly

By

Kylie McQuarrie

Business Accounting Staff Writer

September 01, 2022

5 min read

We are committed to sharing unbiased reviews. Some of the links on our site are from our partners who compensate us. Read our editorial guidelines and advertising disclosure.

The bottom line: Care.com’s HomePay is a comprehensive, fully automated nanny payroll solution for household employers who don’t want to spend any time on payroll management. HomePay literally does it all, from onboarding your new employee for you to dealing with federal and state taxes—two unique features in the world of nanny payroll.

But HomePay’s stellar features and unlimited customer service come at a higher price. At $75 a month with a $100 year-end tax-filing fee, HomePay costs more than competitors with similar features like SurePayroll and Savvy Nanny. As a result, it works best for household employers who can afford to pay more for comprehensive payroll services.

Automatic direct deposit

Automatic state and federal payroll tax calculation and deposit

Lifetime access to tax records

No setup fee

Unlimited customer support for you and your employee

Additional fee for end-of-year tax filing

Above-average monthly cost

No paper check printing (direct deposit only)

Fewer benefit add-ons than competitors like Paychex

Our most affordable payroll solution: SurePayroll

SurePayroll is an affordable and straightforward payroll software that offers automatic payroll runs, tax filing, and exceptional customer service.

HomePay review: Table of contents

• HomePay plans and pricing

• Key payroll features

• HomePay vs. top competitors

• Drawbacks

• Additional features

• The takeaway

• FAQ

HomePay plans and pricing

Data as of 9/1/22. Offers and availability may vary by location and are subject to change.
*Billed quarterly

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HomePay’s key payroll features

HomePay takes care of every single aspect of household payroll—and we do mean every aspect.

We’ll dive into each feature in-depth below, but right off the bat, let’s emphasize who HomePay is right for. In general, HomePay works best if you’re willing and able to trade a higher price for the peace of mind (and saved time) that comes from fully outsourced payroll, including tax filing and audit assistance. 

Sound like you? Let’s get started.

Paycheck and payroll tax filing

Most nanny payroll software, even DIY software, will calculate paycheck amounts for you. HomePay is the opposite of DIY, though, so converting your nanny’s time worked into a paycheck amount is just its starting point: 

• Once HomePay calculates the right paycheck amount, you can approve the paycheck and run payroll (employer-speak for “pay your nanny”) on any device—mobile, tablet, laptop, or desktop.
• HomePay deposits your nanny’s check via direct deposit on a schedule you choose. 
• If you offer benefits like PTO (paid time off), each paycheck calculation includes PTO accrual tracking.
• Both you and your nanny can access payroll records and paystubs online. (If you end up moving on from HomePay, you’ll still have lifetime access to those crucial payroll records for tax purposes.)

As for tax filing and calculation, HomePay also does it all: 

• Calculates the right amount of payroll taxes and automatically withholds them from your nanny’s paycheck
• Prepares and submits federal and state payroll taxes on the correct tax filing schedule and with the correct tax forms
• Acts as a point of contact with your state tax agency, which includes managing any tax notices sent your way

Price check: HomePay’s total annual cost

HomePay charges $75 a month, but bills you quarterly. That means you’ll pay $225 per quarter for HomePay, or $900 for the full year. If you add HomePay’s $100 end-of-year tax filing services, you’re looking at a yearly total of $1,000.

High-level customer service

Unlike many payroll services, HomePay’s extensive, high-quality customer service doesn’t cost extra. Instead, unlimited customer service is built into your plan and price: 

• Unlimited customer support for you and your household employees
• Employee onboarding for one or more employees
• Audit support
• 24/7 help via phone, chat, or email

And like we said, you’ll always have lifetime access to your tax records and paystubs via your HomePay account—even if you stop using HomePay. 

HomePay vs. top competitors

Data as of 9/1/22. Offers and availability may vary by location and are subject to change.
*Billed quarterly

HomePay’s main drawbacks

Higher pricing than some competitors

We’re sure you’re not shocked to hear this (at least, not at this point in our review), but HomePay’s comprehensive services definitely come at a quite a price. At $75 a month, HomePay adds up to $900 a year. If you want to use HomePay’s year-end tax-filing services, you’ll pay an extra $100 fee, which makes for a yearly total of $1,000. 

By way of comparison, SurePayroll also offers automatic direct deposit, tax calculation, and tax filing. But it starts at just under $50 a month, or $600 a year. And Savvy Nanny offers similar services, including automatic tax remittance, at $40 a month with a $50 end-of-year fee, which brings you to just $530 for the year.

Neither SurePayroll nor Savvy Nanny have the same comprehensive customer service as HomePay. If having constant access to customer care in case of a payroll (or payroll tax) problem is essential for you, HomePay is still a better fit, assuming the price is right.

Price check: HomePay vs. NannyPay

Looking for an affordable alternative to HomePay? Our top recommendation is NannyPay. As a DIY software service, NannyPay doesn’t do much for you beyond calculate paychecks and payroll taxes. But it does cost just $149 a year—which makes it HomePay’s polar opposite, both in terms of price and features. If that sounds more appealing to you than HomePay, check it out.

Price includes one employee only

HomePay is already at the higher end of the nanny payroll pricing scale, but it’s even more expensive for employers with more than one nanny on staff. The starting price of $75 a month applies to one employee only.

Honestly, that’s pretty standard practice for nanny payroll software—especially software specific to households only, as opposed to small-business payroll companies like Paychex and SurePayroll. Still, if you have more than one employee and don’t want to pay extra, we recommend Savvy Nanny instead. Its cheaper base price is a flat rate that includes two household employees. 

Direct deposit only (no paper checks)

This might not be a drawback for every household employer, but HomePay only offers direct deposit. You can’t choose from other payroll options like paper checks or cash app deposits—it’s direct deposit or nothing, which can make your job less appealing to employees who prefer a different payment method.

If you prefer to pay by check and don’t mind DIY payroll, NannyPay lets you print checks from home.

Other HomePay features

HomePay’s customer service and thorough payroll features set it apart, but it offers a few optional services as well.

Automatic government reporting

Before you hire your first employee, you need to apply for an employer identification number, or EIN. An EIN is basically the equivalent of an individual social security number for businesses, and if you’re a household employer, you are legally required to have one. (In other words, you can’t file payroll taxes using your social security number—you must file using an EIN.) 

You can get an EIN by applying for one from the government—or, if you use HomePay, HomePay can apply for one on your behalf and send it your way.  

Along with setting up your new business tax ID, HomePay can file all legally required new hire reports in your state. HomePay stays on top of deadlines so you don’t have to.

Workers compensation add-on

Workers compensation insurance can be just as important to household employers as it is to other small-business owners. If you’re interested in workers comp, HomePay works with a broker from the insurance company Homestaff Protect to match you with the right plan.

The takeaway

Care.com’s HomePay is a good payroll option for householder employers who aren’t overly concerned about costs and want the most comprehensive payroll help available. 

Want to learn more about taxes before becoming a household employer? Our guide to filing small-business taxes can help.

Get Started with HomePay

Related reading

Nanny payroll FAQ

Am I a household employer?

You could be a household employer if you meet the following criteria:

• You hired a nanny, babysitter, maid, nurse, caretaker, cook, or another person who works out of your home, and you pay this person more than $2,400 a year. (In contrast, a babysitter who works out of their own home is self-employed.)
• You direct the employee’s work, including what they do and how they do it. (For instance, your house cleaners don’t choose what to clean on their own; you tell them what and where to clean.)
• You provide the supplies, materials, or tools the employee needs to do their job at your home.

It doesn’t matter if your nanny or babysitter works part-time or full-time, if you hired them through an agency or through an ad in the paper, or if you pay them by the hour, week, or month. They’re considered your employee regardless, as long as you pay them more than $2,400 a year—which means you’re responsible for deducting their payroll taxes and filing tax forms at the end of the year.

However, you aren’t a household employer if you hire a contractor to repair your roof, a landscaping company to take care of your lawn, or a daycare owner who works out of their own home. If the person you hire has their own company, uses their own tools, and decides how they carry out the work you want them to do, then that person is self-employed and will file their own taxes quarterly or at the end of the year.

What are payroll taxes?

Payroll taxes are the taxes you’re required to withhold from your employee’s paychecks and remit to the federal government. Typically, you only need to withhold Social Security taxes and Medicare taxes (collectively known as FICA taxes) from your employees’ paychecks. You do not need to withhold federal and state income taxes unless your employee asks you to and you agree.

You’ll also need to match your employee’s contribution to Social Security and Medicare out of your own pocket. Additionally, you’ll pay the federal unemployment tax (also known as FUTA taxes) to contribute to unemployment benefits.

You can learn all about which payroll taxes you need to pay on the IRS’s website.

Do I need to withhold income taxes from my employees’ paychecks?

No. Unlike typical small businesses, household employers aren’t required to withhold federal income taxes from their employees’ paychecks. However, an employee might ask you to withhold their income tax to make tax returns easier at the end of the year. If you agree, you’ll need to fill out and file some additional tax forms.

Methodology

To evaluate HomePay and generate our star rating, we took several factors into account: 

• Pricing, including monthly and year-end fees, setup fees, and any hidden fees
• Payroll features, including automatic payroll tax filing, direct deposit, and pay stub access
• Overall accessibility and usability, including software interface and mobile access
• Customer service, including current user reviews, company reputation, and customer service features and hours

We also took our expert’s opinion into account when creating our star rating.

Each category was weighted equally when evaluating software. Star ratings are re-evaluated frequently and subject to change.

Disclaimer

At Business.org, our research is meant to offer general product and service recommendations. We don’t guarantee that our suggestions will work best for each individual or business, so consider your unique needs when choosing products and services.

Written by

Kylie McQuarrie

Kylie McQuarrie has been writing for and about small businesses since 2014. Prior to writing full-time, she worked with a variety of small-business owners (from freelance writers to real-estate solopreneurs), which gave her a front-row look at small-business owners’ struggles, frustrations, and successes. Currently, she’s Business.org’s accounting and payroll staff writer. Her work has been featured on SCORE.org, G2, and Fairygodboss, among others.

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Payroll – what is it and how to fill it out correctly?

When the enterprise pays any payment (wages, bonuses, advances) to employees, a payroll is issued. In essence, payments can also be processed by cash receipts, but they are valid only for one working day, which is simply inconvenient for a large enterprise with a large number of employees.

So, we have found out that the payroll is used to process any payments in the enterprise, let’s now try to figure out how to fill out the payroll correctly, what is needed for this and which circle of people is responsible for this.

The payroll refers to accounting cash documents, it is compiled in the accounting department, and then transferred to the cashier. The document is drawn up in a single copy.

Consider the procedure for issuing a statement.

Form of payroll

Decree of the State Statistics Committee dated 05.01.2004 No. 1 approved the form of payroll (primary accounting documentation) No. T-53 (number according to the All-Russian classifier of management documentation – 0301011).

The procedure for filling out the payroll

The accounting department prints out (or fills out electronically, and then prints out) a form in the established T-53 form. The document contains a table of four to six columns and rows on the number of employees who will receive cash, as well as a total line. A sample of filling out the payroll, if desired, can be viewed on the Internet.

Filling in the title page

So, the accountant responsible for filling out the payroll indicates on the title page the name of the enterprise and structural unit or the last name, first name and patronymic of an individual entrepreneur. It also indicates the code according to the general classifier of enterprises and organizations and “debit 70” in the “Corresponding account” column.

Here, on the title page of the payroll form t 53, the validity period of the payroll is indicated (five days from the date of its signing, in accordance with the Regulation of the Bank of Russia of October 12, 2011 No. 373-P) and the total amount according to the payroll (in figures and in words) .

Also indicate the date of the payroll (no later than the day of cash withdrawal and signing of the document) and the serial number (starting from the beginning of the calendar year).

The billing period in the payroll is indicated “from __ to” – the dates for which the payment is made are set. For example, the first and fifteenth of the month, if this is a payroll for the issuance of an advance. Even if the payments themselves are made from the twentieth.

Signing the statement

Before the cashier can start issuing funds according to the statement, it must be certified by the head of the enterprise – such a signature will serve as the basis for the cashier to start work.

After all funds are issued and accounted for, the filling of the payroll t 53 is checked by the chief (senior) accountant of the enterprise. If everything is in order, he also signs the statement.

Filling in the table

If the company has a lot of employees, the table in the statement is stretched over several sheets. Their number must be noted in a special column.

In the first column of the table, you need to indicate the employee’s serial number, in the second – his personnel number (taken from the employee’s personal card), in the third – the employee’s last name, first name and patronymic (it is advisable to indicate the name and patronymic in full so that there is no confusion).

The amount of money issued per employee is indicated in numbers in the fourth column, the last line of the table indicates the total amount.

p>In the fifth column, employees sign, receiving cash in their hands.

The sixth column indicates the documents that are needed for cash settlements (employee’s statement, power of attorney, and so on), if necessary, this column (column) is simply crossed out.

The rules for filling out the payroll state that the cashier must check whether everything in the payroll is correct before disbursing funds. In case of detection of inaccuracies and errors, the statement is transferred to the accounting department for re-registration.

Corrections in payroll

Since the payroll is a primary accounting document, it is best not to make any blots or corrections in it. If a mistake is made, it is better to play it safe and redo the statement with all the signatures again.

If for some reason this is not possible, the erroneous information is carefully crossed out, the correct version is written on top, the correction is certified by the signatures of the same persons who sign the statement itself. You must also indicate the date the correction was made.

Payroll closing

At the end of the payroll period, even if not all payments are made, the cashier closes the payroll:

• writes “deposited” next to the name of each employee who did not receive the money;
• counts the disbursed and deposited cash and displays these two amounts on the last sheet;
• certifies the result with his signature;
• issues an expenditure cash warrant, in which it indicates the amount of money issued, and puts down the number of this warrant in the statement.

The completed payroll is transferred to the accounting department.

Journal of registration of payrolls

Accountants must record all payrolls in a special journal, which is maintained in the form T-53a.

It indicates the purpose of the statement, the amount issued, the date and number of the statement, and also indicates the responsible persons. Recall that the numbering of payrolls is carried out in order from the beginning of the calendar year.

In conclusion, it is worth noting a small but important nuance: if the payroll for wages can be both simple payment and settlement and payment, then, for example, the payroll for an advance can only be a payroll, since the advance is not accrued but simply paid. The same applies to other similar payments.

ipinform.ru

Visa and Mastercard started returning insurance deposits to Russian banks

Maxim Stulov / Vedomosti

The international payment systems Visa and Mastercard, which left Russia in March, began to gradually return insurance deposits to Russian banks that they kept in case of problems with payments, Vedomosti found out. After Visa and Mastercard left the Russian market, banks were afraid that they would not be returned these deposits, which are a guarantee of the fulfillment of the bank’s obligations to the payment system for settlements and operations.

“Absolut Bank” the insurance deposit was returned in full, and Visa and Mastercard themselves did not interfere with this, the bank representative said: after the completion of the clearing procedures (settlements for transactions), payment systems immediately began to return. According to him, other banks also managed to return the deposit. A representative of Transcapitalbank (TKB) also confirmed to Vedomosti that the bank had settled all settlements with international payment systems. Zenit Bank applied to Visa and Mastercard for the return of the security deposit and is at the stage of settling mutual settlements, its representative notes.

This issue is irrelevant for VTB, its representative said, without specifying why. Sberbank, Gazprombank, Alfa-Bank, Russian Agricultural Bank, Moscow Credit Bank, Promsvyazbank, Sovcombank, FC Otkritie, Raiffeisenbank, Rosbank and Tinkoff Bank did not respond to Vedomosti’s request.

On March 10, Visa and Mastercard stopped servicing Russian cards: Russians can no longer use these cards abroad, make cross-border transfers, and pay for purchases on foreign websites. In Russia, cards continue to work, since all transactions in the country are processed by the National Payment Card System (NSPK). Many banks have announced that already issued cards will automatically become perpetual.

Deposits are needed to cover five-day turnover, if the bank issuing bank cards of Visa and Mastercard payment systems for any reason cannot make settlements, a representative of Absolut Bank explains. Each payment system has its own formula for calculating the size of the deposit, says Natalya Bazaley, deputy head of the digital business unit at TKB. On average, the size of the deposit is calculated as the maximum amount of one-day turnover on cards over the past six months, multiplied by 5, says a representative of Absolut Bank.

Visa and Mastercard losses

Payment systems did not disclose their market share in Russia. But the NSPK report for 2021 notes that in terms of emission, the share of the Mir payment system at the end of the year was 32. 3%, and in terms of the volume of transactions – 25%.
The international payment system Visa estimated its losses after leaving Russia at $35 million. Another $25 million was spent on supporting the company’s employees in Russia and Ukraine. Visa’s net income increased by 24% in the first half of fiscal year 2021/22 to $7.6 billion. At the same time, Visa’s revenue from business in Russia for the entire fiscal year 2021 and the first half of 2022 amounted to only 4% of total consolidated net revenue.
In the first quarter, Mastercard lost $34 million from the suspension of operations in Russia and international sanctions against its individual clients. But this was offset by a net profit of $30 million. Thus, the loss amounted to $4 million. The company’s revenue grew by 24% to $5.2 billion, and the share of business in Russia was only 1% of this amount. The company’s net profit grew by 44% year-on-year to $2.6 billion. amount to several billion, Kommersant wrote about the problem at the end of March.

At the same time, the deposit in international payment systems was a dynamic indicator and was calculated at the current moment: with a significant increase in the volume of transactions, the deposit was revised upwards, with a decrease, accordingly, it could be reduced, Bazaley explained. In addition, the insurance deposit in international payment systems was unlimited, added a representative of Absolut Bank.

Not only a deposit can act as a security for payments. In one of the international payment systems, it was first a letter of credit (a special bank account where you can reserve funds for transactions. – Vedomosti), then a deposit, in NSPK this is a guarantee, said a representative of Absolut Bank. There were not so many real money deposits – basically there were guarantees, Roman Prokhorov, chairman of the board of the Financial Innovations Association, points out. Moreover, they were accepted depending on the quality of the bank: the better the bank, the less requirements for the provided security, he explained.

After the departure of Visa and Mastercard, NSPK assumed operational risks on the cards of these payment systems and demanded similar guarantees from banks that they gave Visa and Mastercard, Kommersant reported. At the same time, NSPK did not accept deposits, but asked for guarantees from another bank. The guarantee agreement should be concluded with the Central Bank so that the regulator immediately knows which correspondent account of which credit institution to write off money in case of problems with a particular bank.

The idea to provide NSPK guarantees to cover the possible risks of payments actually belongs to the Bank of Russia, said the source of Vedomosti, who is familiar with the issue. The guarantee in NSPK is provided for one year with further prolongation, the representative of Absolut Bank explained.

A guarantee from another bank is much more convenient than deposits, he added. The insurance deposit requires the placement of funds in a foreign bank that works with the payment system, and these funds are placed free of charge, i. e. the bank does not receive interest on such a deposit. Therefore, from an economic point of view, paying a commission for providing a guarantee is much more profitable than placing a large amount of funds for free, continues the representative of Absolut Bank. The guarantee could be potentially cheaper than placing real money in an insurance deposit, Bazaley agrees.

Issuing one document is much more convenient and profitable than putting huge sums into accounts as a deposit, said Alma Obayeva, chairman of the board of the non-profit partnership National Payment Council. According to her, this option is also convenient for the NSPK, since Russian legislation applies to the guarantee, you can apply with it to the Central Bank, which, with a 100% guarantee, will help resolve the issue of non-payments and other risks.

At the same time, the return of insurance deposits may be problematic for those banks that are now under strict blocking US sanctions, Prokhorov said: they cannot physically get their funds back, since their correspondent accounts are blocked, they are prohibited from making payments in dollars and euros, and the banks themselves are mostly disconnected from the international interbank information transfer system SWIFT.