Definition
A household worker is an individual who is employed to perform domestic duties within a private residence. This can include a range of job roles such as nannies, housekeepers, gardeners, caretakers, and cooks. Unlike regular employees in businesses, household workers are subject to specific tax and labor regulations that differ from typical employment contracts.
Examples
- Nanny: Employed to take care of the employer’s children, often responsible for feeding, bathing, and educational activities.
- Housekeeper: Hired to perform cleaning and maintenance tasks like dusting, vacuuming, and laundry within the household.
- Gardener: Responsible for maintaining the plants and landscaping around the residence.
- Caretaker for the elderly: Provides personal care and assistance to elderly individuals, including help with daily activities and medical care.
Frequently Asked Questions (FAQs)
Q: Is federal income tax withholding required for household workers?
A: No, federal income tax withholding is not required on payments made to household workers. It is the worker’s responsibility to pay their own income taxes.
Q: What taxes are required for household workers?
A: Employers must pay Social Security and Medicare taxes (often referred to as FICA taxes) for household workers if they pay the worker $2,200 or more in wages in a calendar year (as of 2023).
Q: How are Social Security and Medicare taxes reported and paid?
A: Employers are required to file Schedule H (Form 1040) to report Social Security and Medicare taxes for household employees. This form is usually filed annually with the employer’s federal income tax return.
Q: Are there any exceptions to paying Social Security and Medicare taxes for household workers?
A: Yes, exceptions include payments to your spouse, your child under the age of 21, your parent (under certain conditions), and any employee under the age of 18 at any time during the year.
Domestic Employment:
Employment within a private household, including roles such as nannies, maids, and gardeners.
A form used by employers to report wages paid to employees and the taxes withheld from them. Household employers must provide W-2s to employees and the Social Security Administration.
The form used to report household employment taxes, including Social Security, Medicare, and optional federal unemployment taxes.
Online References
Suggested Books for Further Studies
- Household Employer’s Tax Guide by the IRS
- Employment Law: A Guide for Domestic Employers by Elizabeth Kiernen
- The Household Employee’s Guide to Labor and Employment Law by Marc Linder
Fundamentals of Employment Law: Household Workers Basics Quiz
### Is federal income tax withholding required for household workers?
- [ ] Yes, employers must withhold federal income tax.
- [x] No, withholding federal income tax is not required.
- [ ] It depends on the amount paid.
- [ ] Only if the worker requests it.
> **Explanation:** Federal income tax withholding is not required on payments made to household workers. It is their responsibility to pay their own income taxes.
### Are Social Security taxes required for household workers?
- [x] Yes, they must be paid by the employer.
- [ ] No, they are not required.
- [ ] Only for workers under 18.
- [ ] It depends on the state.
> **Explanation:** Employers must pay Social Security and Medicare taxes for household workers if they meet the wage threshold for the year.
### What form must employers file to report household employment taxes?
- [ ] Form 941
- [x] Schedule H (Form 1040)
- [ ] Form 1099
- [ ] Form W-4
> **Explanation:** Employers are required to file Schedule H (Form 1040) to report Social Security and Medicare taxes for household employees.
### Who must employers provide W-2 forms to?
- [x] Household employees and the SSA
- [ ] Only the IRS
- [ ] Only the employee
- [ ] No one, household employees do not get W-2 forms.
> **Explanation:** Employers must provide W-2 forms to household employees and the Social Security Administration (SSA).
### At what wage threshold must Social Security taxes be paid for household workers in 2023?
- [ ] $1,000
- [ ] $1,500
- [ ] $2,000
- [x] $2,200
> **Explanation:** For 2023, employers must pay Social Security and Medicare taxes if they pay the worker $2,200 or more in wages within the calendar year.
### Are employers required to pay unemployment taxes for household workers?
- [ ] Yes, always.
- [x] It is optional federally, but may be required by some states.
- [ ] No, never.
- [ ] Only if the worker requests it.
> **Explanation:** Paying federal unemployment taxes for household workers is optional, but it may be required by some states.
### Which household worker does not require Social Security and Medicare taxes to be paid?
- [ ] A nanny
- [x] A spouse
- [ ] A gardener
- [ ] A housekeeper
> **Explanation:** Employers are not required to pay Social Security and Medicare taxes for household work performed by their spouse.
### What form is used to calculate federal unemployment taxes for household employees?
- [x] Schedule H (Form 1040)
- [ ] Form 940
- [ ] Form 941
- [ ] Form 944
> **Explanation:** Employers use Schedule H (Form 1040) to calculate federal unemployment taxes for household employees, if they choose to pay them.
### In which publication can information about household employer tax responsibilities be found?
- [x] IRS Publication 926
- [ ] IRS Publication 15
- [ ] IRS Publication 525
- [ ] IRS Publication 970
> **Explanation:** IRS Publication 926, the Household Employer's Tax Guide, provides information on household employer tax responsibilities.
### Are any employees under 18 exempt from Social Security and Medicare taxes for household employment?
- [x] Yes
- [ ] No
- [ ] Only if the employer chooses to exempt them
- [ ] Only if they are full-time students
> **Explanation:** Household employees under the age of 18 are generally exempt from Social Security and Medicare taxes if they are not working as their primary occupation.
Thank you for exploring the tax responsibilities surrounding household workers and tackling our challenging quiz questions. Keep striving for mastery in employment law!
