Hiring Household Employees

If you are hiring household employees, are you subject to payroll taxes? If you have a household employee, such as a housekeeper, maid, babysitter, gardener or anyone else who works in or around your private residence as your employee, you may be required to pay payroll taxes.

Repairmen, plumbers, contractors and other business people who provide their services as indepen­dent contractors are not your employees. Household workers are your employees if you can control not only the work they do, but also how and when they do it. Household employees include housekeepers, maids, babysitters, gardeners, and others who work in or around your private residence as your employee. Repairmen, plumbers, contractors, and other business people who provide their services as independent contractors, are not your employees.
If you pay cash wages of $1,900 or more in 2015 (this threshold can change from year to year) to any one household employee, you generally must withhold 6.2% of social security and 1.45% of Medicare taxes (for a total of 7.65%) from all cash wages you pay to that employee. You also must pay your share of Social Security and Medicare taxes, which is also 7.65% of cash wages. (Cash wages include wages you pay by check, money order, etc.) Unless you prefer to pay your employee's share of Social Security and Medicare taxes from your own funds, you should withhold 7.65% from each payment of cash wages made.
You can find the specified dollar amounts and percentages under the topic "Do You Need To Pay Employment Taxes?" in Publication 926 (PDF), Household Employer's Tax Guide.
You are not required to withhold federal income tax from wages you pay to a household employee. However, if your employee asks you to withhold federal income tax and you agree, you will need a completed Form W-4
Do not withhold or pay Social Security and Medicare taxes from wages you pay to:

1. Your spouse,
2. Your child who is under age 21,
3. Your parent, unless an exception is met, or
4. An employee who is under age 18 at any time during the year, unless performing household work is the employee's principal occupation. If the employee is a student, providing household work is not considered to be his or her principal occupation.

For more information, refer to Publication 926 (PDF), Household Employer's Tax Guide; and, if you have a household employee, please let me know. I can help you fill out the proper paper­work and meet any tax filing re­quirements.