What You Need to Know About Being a Household Employer

We hire people to help us around our homes or to care for our loved ones all the time. Does that mean they are considered our "employees" though? Let's find out...

If you have babysitters, nannies, health aides, caregivers, private nurses or gardeners, then you have household employees. Exceptions may include family members or self-employed individuals who have their own businesses and can be hired by the general public.

Withholding taxes

If you pay a household worker $2,000 or more in 2017, you will need to withhold social security (6.2%) and Medicare (1.45%). You must apply for an employer identification number (EIN) by completing Form SS-4. You will then need this EIN when completing Form W-2 at the end of the year.

Note: You are not required to withhold Federal income tax from wages of your household employee. If your employee requests (and you agree) Federal income tax to be withheld, then they must complete Form W-4. You should contact your state of residence to see the withholding requirements as they may vary from state to state.

If, for any reason, you wish to personally pay the social security and Medicare taxes that should be withheld from your employee's wages, this is allowed and an example of the reporting is described in IRS Publication 926.

Remitting withholding taxes

Payroll taxes are reported on Schedule H which is filed with your Federal income tax Form 1040 return. As an employer, you will also be liable for the matching of social security (6.2%) and Medicare (1.45%) taxes. These taxes, along with the employee's withheld amounts and any Federal withholding taxes, are paid when you file your personal return.

Due dates

• Form W-2 (copies B, C & 2) must be given to your employee no later than January 31 of following year.
• Form W-2 Copy A must be mailed to the Social Security Administration by January 31 of following year.
• Schedule H is filed by the due date of Form 1040.

Record keeping

You must keep a record of each employee's summary of pay dates, gross wages, taxes withheld, net check amount, along with their address and social security number for a minimum of four years.

This is meant to only touch briefly on the highlights of household employees to give you a general background. All information was obtained from Department of Treasury IRS Publication 926. Please refer to this publication for more specific details, such as Federal Unemployment requirements, State Unemployment links and determining legal status of potential household employees. As always, we are here to answer any additional questions you may have.

Joy Miller - Senior Staff Accountant
jmiller@klcpas.com
Phone: 269.983.0131, x415