Do You Have a Household Employee?

1.18_Household_EmployeesEmployee or Self-Employed Worker?

You have a household employee if you hired someone to do household work and that worker is your employee. The worker is your employee if you can control not only what work is done, but how it is done. If the worker is your employee, it does not matter whether the work is full time or part time or that you hired the worker through an agency or from a list provided by an agency or association. It also does not matter whether you pay the worker on an hourly, daily, or weekly basis, or by the job.

Household work is work done in or around your home like babysitters, cleaning people, domestic workers, nannies, and others.

If only the worker can control how the work is done, the worker is not your employee but is self-employed. A self-employed worker usually provides his or her own tools and offers services to the general public in an independent business.

A worker who performs child care services for you in his or her home generally is not your employee. If an agency provides the worker and controls what work is done and how it is done, the worker is not your employee.

Do You Need To Pay Employment Taxes?

If you have a household employee, you may need to withhold and pay social security and Medicare taxes, pay federal unemployment tax, or both.

Here is a useful table that shows who must pay these taxes:

IF you … THEN you need to …
A– Pay cash wages of $1,800 or more in 2012 to any one household employee.
  • Withhold and pay social security and Medicare taxes.
  • The taxes are 13.3% of cash wages.
  • Your employee’s share is 5.65%.
  • Your share is 7.65%.
  • (You can choose to pay it yourself and not withhold it.)
Do not count wages you pay to—

  • Your spouse,
  • Your child under the age of 21,
  • Your parent or
  • Any employee under the age of 18 at any time in 2012.
B– Pay total cash wages of $1,000 or more in any calendar quarter of 2011 or 2012 to household employees.
  • Pay federal unemployment tax.
  • The tax is 0.6% of cash wages.
  • Wages over $7,000 a year per employee are not taxed.
  • You also may owe state unemployment tax.
Do not count wages you pay to—

  • Your spouse,
  • Your child under the age of 21, or
  • Your parent.
Note. If neither A nor B above applies, you do not need to pay any federal employment taxes. But you may still need to pay state employment taxes.

 

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