A household employee is someone who is hired to do household work. The employer, who is usually the head of the household, controls the work to be done and how it is done, as well as provides the tools and instructions necessary to perform the household work. It does not matter whether the employee is hired through an agency, or how frequently the employee is paid. Some common examples of household employees include:
- Babysitters and/or nannies
- Maids and/or housekeepers
- Private nurses
A worker who offers services to the general public, provides his or her own tools, and controls how the job is done , such as by hiring his own helpers, is self-employed and not a household employee.
Do I Have to Report and Pay Taxes on Their Wages?
If you pay your household employee total wages of more than $1,800, then you must report and pay social security and Medicare taxes on that employee's annual wages.
If you paid a household employee total wages of $1,000 or more in any calendar quarter, then you must report and pay federal unemployment tax.
Some states may also require you to pay state unemployment tax for your household employee.
Do I Have to Withhold Federal Taxes from My Household Employee's Wages?
If the household employee does not ask you to withhold federal incomes taxes from his or her wages, then you are not required to do so. Report and pay the taxes that you owe on your employee's wages. The employee is responsible for his or her own income tax.
However, if you agree to withhold federal income taxes from your household employee's wages, then you must pay the income tax to the IRS. Failure to do so constitutes tax evasion, which carries serious consequences.
Do I Need a Lawyer to Help Me with My Tax Problems?
Tax law is a very complicated and frustrating subject. To make matters worse, tax law changes every year. A tax attorney can help you understand current tax law and how it affects your tax problem. If you have not paid taxes for several years, a lawyer can assist you by negotiating with the IRS for an offer in compromise or installment payment agreement. If you need to go to tax court, an attorney can represent you and help minimize your income tax bill.