There are requirements for household employees
Did you know if you hire people to work around your house, you might need to pay Social Security taxes for them? If you hire someone to do your chores, you should understand the responsibilities that come with being an employer. If you don’t, you can be penalized for failure to pay the taxes, and your employee could end up with no Social Security coverage.
Generally, if you pay someone a salary of at least $1,300 a year to work around the house, you must pay Social Security taxes for that employee. Any cash you pay to cover the cost of the employee’s transportation, meals or lodging must be considered as salary and must be reported, too.
If you anticipate paying at least $1,300 – and it doesn’t take long to reach this amount – you need to withhold the Social Security tax from the employee’s wages. That’s 7.65 percent of the gross wages. Plus, you must pay an additional 7.65 percent, which is the employer’s share of the Social Security taxes. Send a report of your employee’s earnings and a check for the combined Social Security taxes to the IRS with your federal tax return.
If you pay your own son or daughter or parent to perform household work for you, you may need to report their wages, too. But, if your son or daughter is younger than 21 years old, you do not have to report the wages unless household work is that person’s principal occupation.
When you report wages and pay the taxes to IRS, your employee gets credits toward Social Security benefits and Medicare coverage. This includes retirement and disability benefits. It also includes survivors benefits for family members if the worker dies.
Still have questions about paying Social Security for household employees? Visit us at www.ssa.gov/pubs/10021.html to view the fact sheet, Social Security-Household Workers.