If you are considering hiring a household employee or have already done so, there is more to their employment that many people may realize. In addition to the salary you pay to your employee, you will also be responsible for withholding federal and state taxes as required by law. Household employees can include:
- Private Nurse or Heath Aide
- Security Personnel/Body Guard
When Do I Need to Pay Employment Taxes?
Per the IRS, if you paid $1,000 or more to a household employee, then you will need to pay federal unemployment tax. As for FICA taxes, if you paid cash wages in the amount of $2,000 or more to any household employee, then you will need to withhold and pay FICA taxes (Medicaid and Social Security). The salary limits include any and all payments, including bonuses.
The IRS also continues to state that ““You don’t need to withhold federal income tax from your household employee’s wages. But if your employee asks you to withhold it, you can.” If your employee asks you to withhold federal taxes for them, they will need to fill out a Form W-4.
Documents and Information You Need
If you have, or plan to have, household employees, you will need the following information to get started:
- Your federal and state identification numbers
- Payroll information for each employee (hours, wages, etc.)
- Employee forms (W-2s, W-4s)
- Quarterly filings for state and federal
If you need assistance managing the payroll of your household employees to ensure you follow all required federal regulations and obligations to pay taxes, you can enlist the help of our payroll services. Payroll companies aren’t just for small and large businesses, we can help everyday individuals manage their household employees.
For additional help with preparing for employee taxes contact our Payroll Services today!