When Do You Need to Pay Household Employment Taxes?

person cleaning table

We all could use some help around the house, but if you pay people to work in your household, then you may need to report and pay household employment taxes.

Who Is Considered a Household Employee

A household employee is someone who works part-time of full-time within your home and whose work you have control over, in other words, they are not an independent contractor. They can be paid on an hourly, daily, weekly, or per-job basis. Some examples of a household employee are babysitters, nannies, housekeepers, private nurses, and health aides.

What Are Household Employment Taxes?

If you pay a household employee more than $2,600 in a year, then you may have to withhold and pay Social Security and Medicare taxes. This means that you must complete a W-2 form for each employee and submit a W-3 for each employee to the IRS. If you pay more than $1,000 per quarter to household employees, then you also have to pay federal unemployment taxes. You do not have to withhold federal income taxes, but you can if the employee asks you to, in which case the employee will need to complete a W-4 form.

Who Is Not a Household Employee

Maybe you pay your 17-year-old to babysit your 8-year-old, or your mom to keep your garden growing every week, but for tax purposes, they are not considered employees. If you pay wages to your spouse, your child under the age of 21, your parent, or an employee under the age of 18, you should not withhold or pay taxes.

**Keep in Mind: Some exceptions may apply to the above.

If there are people who work for you in your home, make sure you’re paying the proper taxes. Call a tax preparer today to get started.

**Please keep in mind: Tax laws, eligibility requirements, and rates change often, and these lists are not exhaustive. Always contact a tax preparer for the most up-to-date information.