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Not Just Nannies: Who Should Be Classified as a Household Employee?

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Chris Bibey

Are you unsure of whether or not you have a household employee? Is this causing you confusion when it comes to taxes, such as wondering if you should issue a W-2?

Here’s what the IRS has to say about household employees:

“You have a household employee if you hired someone to do household work and that worker is your employee. The worker is your employee if you can control not only what work is done, but how it is done.”

It doesn’t matter if the person is a full or part-time employee. It doesn’t matter if you pay them by the job, monthly, weekly, daily, or on an hourly basis. If the person does household work, there’s a very good chance he or she is your employee.

Examples of household employees include but are not limited to:

  • Nanny
  • Butler
  • Cook
  • Driver
  • Health aide
  • Housekeeper
  • Private nurse
  • Landscaper/Yard worker

The second you hire a household employee is the second you should learn more about your tax obligations, such as the deadline for household employee W-2s.

Above all, you need to know: you are required to deliver your household employee his or her W-2 form by January 31st.

Do You Need to Pay Employment Taxes?

While you may think there’s some gray area in regards to whether you’re required to pay employment taxes, these details provided by the IRS should clear the air:

  • If you pay cash wages of $2,000 or more in 2017 to any household employee, you need to withhold and pay both Medicare and Social Security taxes.
  • You do not have to count wages that you pay to your child under the age of 21, your spouse, your parent, or any employee who was under the age of 18 at any point of the year.
  • If you pay total cash wages of $1,000 or more to a household employee during any calendar quarter of 2017, you need to pay federal unemployment tax.

Note: the dollar threshold is applied separately to each household employee and includes all payments, such as bonuses.

Failure to pay the necessary employment taxes can lead to trouble with the IRS, with penalties and fines reaching as high as $25,000.

The best way to prevent trouble is to provide every household employee with a W-2 form by the deadline, while also knowing your obligations in regards to employment taxes. 

This website contains articles posted for informational and educational value. SurePayroll is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, SurePayroll. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant. If you require legal or accounting advice or need other professional assistance, you should always consult your licensed attorney, accountant or other tax professional to discuss your particular facts, circumstances and business needs.