A household
worker such as a babysitter, nanny, maid, healthcare provider,
or other domestic worker who provides services in your home,
may be your employee. Here are the rules:
 If you control not only what work is
done, but also how the work is done, then the worker is
your employee.
If only the worker controls how the work is
done, the worker is an independent contractor and not your
employee.
The following information pertains to household
employees and not to independent contractors.
If you have a household employee, you are responsible for:
withholding and paying social security and Medicare taxes
(FICA) on all wages paid if you pay $1,700 (in 2009, $1,600
in 2008) or more per year to each household employee.
If
you pay less than $1,700 (in 2009, $1,600 in 2008) annually
to each of your household employees, you do not need to
withhold FICA tax.
paying
Federal unemployment tax (FUTA) on all wages paid if you
pay $1,000 or more per quarter to each household employee.
If you pay less than $1,000 quarterly to each of your household
employees, you do not need to pay FUTA tax.
Only annual
wages up to $7,000 are taxable for FUTA purposes.
reporting FICA and FUTA taxes annually on Schedule H, an
attachment to your annual federal individual income tax return
Form 1040. The addition of these employment taxes to your
regular federal tax liability may require you to pay estimated
taxes or increase your federal withholding to cover these
additional taxes and avoid the assessment of underpayment
penalties.
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providing
to your household employees copies of form W-2 Wage and Tax
Statement annually, which reports the total wages and related
taxes paid to them during the calendar year. The forms are
required to be distributed to each employee on or before
January 31 of each year. Copies are required to be transmitted
to the Social Security Administration by the end of February
annually.
following
state requirements for household employers.
California household employers must register
with the Employment Development Department (EDD) once they
pay wages of $750 or more in a calendar quarter.
Household employers are required to report the hiring of
each new employee to the EDD within 20 days of hire.
If you pay more than $750 in any calendar quarter to your
household employees, those wages are subject to State Disability
Insurance (SDI) withholding.
If you pay more than $1,000 in any calendar quarter to your
household employees, the total wages paid are also subject
to state Unemployment Insurance and Employer Training Tax.
If you pay less than $20,000 in wages per year to your household
employees, you may elect to pay and report taxes annually.
If your total household wages paid exceeds $20,000 annually,
you are required to pay and report applicable taxes quarterly.
There are exceptions to the above rules relating
to the taxation and reporting of wages paid household employees
when the employee is under 18 years old, your spouse, or
your child under 21. There are also exceptions if you are
divorced or widowed and employ your parent who cares for
your minor child or your physically or mentally disabled
child.
The information below is intended to provide
a brief overview of the regulations regarding wages paid
to household employees. Please call us regarding your personal
situation for more specific information.
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