Household Employees

You have the luxury of a cleaning person.  A neighborhood kid cuts your lawn or shovels your snow.  You have a great babysitter when you need one.  You have someone who runs errands for you.  It is so nice to have people you rely upon and who can help you out. 

But, wait!  Are these individuals considered household employees?  Are they hired by you to work in or around your home?  Are they working under your direction?  Are you able to control the work or services being provided?  If the answer is yes, then you are an employer and have an employee. 

So, what does that mean?  Well, you may need to address the issue of employment taxes. 

If a household compensated any one person in cash wages of $2,100 or more in 2018, household employment taxes must be paid by the employer.  There are some exceptions, such as family members or people under the age of 18, but certain restrictions do apply. 

The household is also responsible for withholding and paying Social Security and Medicare taxes.  There are also federal unemployment taxes if wages of $1,000 or more were earned in any calendar quarter of 2018. 

The “employees” must be eligible to work in the US.  The employer and the employee must complete and file an IRS Form I-9. The employer may need to secure an Employer Identification Number and issue documents at the beginning of each calendar year for the prior year.  You, as the employer, may need to file a tax return for having household employees.  Also, you should make certain that your homeowner’s insurance covers such individuals providing services to you. 

Now you begin to ask yourself if the services or work being provided to you is worth it.  Well, you can relax if your employees are hired through a business or agency.  There are many cleaning and lawn services available.  When you engage their services, you pay the company and the company pays the employees.  That relieves you of the responsibility to deal with the tax-related issues.  Yes, perhaps the charge for these services might be a little higher, but you don’t have the liability of having household employees.



About the Author

Kay Sowa is a paralegal in the Trusts and Estates Group at Capehart & Scatchard, P.A. She is an IRS Enrolled Agent, an Accredited Estate Planner®, and a Certified Trust and Fiduciary Advisor. She oversees the trust and estate administration practice for the firm. She is an accomplished author and lecturer who has frequently spoken on behalf of a number of organizations including the National Business Institute and the Institute of Paralegal Education.

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