When hiring household employees, being aware of your responsibilities as an employer is important. Here are some essential factors to consider:
Who is considered a household employee?
A household employee is someone you hire to work in or around your home and have control over their tasks and how they are carried out. This includes full-time and part-time employees and those hired through an agency, regardless of the payment method. Typical examples are housekeepers, babysitters, and gardeners.
Reporting household employee payments on your tax return
If you pay cash wages of more than $2,700 to a household employee and have paid and withheld taxes from their wages, you must remit these payments and report on your tax return using IRS Form Schedule H – Household Employment Taxes. If you hired your employee through an agency, you could request this form from them.
Tax considerations as a household employer
As the employer, you must cover 7.65% of the overall FICA taxes, while the remaining 7.65% should be withheld from the employee’s wages. Additionally, if you pay an employee over $1,000, you must also pay federal unemployment tax (FUTA) on the initial $7,000 of cash wages paid to each employee. Withholding Federal income tax isn’t mandatory but can be arranged.
Things to Keep in Mind When Hiring Household Employees
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