Household Employee
What is a household employee?
A household employee is a person who performs non-business services for a taxpayer in or around a taxpayer's home. This incorporates child care and other dependent care, housecleaning, cooking and yardwork. The taxpayer might be obligated for employment taxes for the household employee.
More profound definition
Household employees are any workers who perform services in your home, unrelated to some other business activity that might happen within your home. Household employee obligations might incorporate, however are not limited to:
- Baby sitter
- Steward
- Caretaker
- Cook
- Domestic worker
- Driver
- Wellbeing helper or home wellbeing attendant
- Servant
- House keeper
- Nanny
- Scene workers
Household employees are distinct from contractors you use to perform services on your home, similar to your contracted pest service. Somebody qualifies as a household employee provided that they follow your orders to perform their fundamental job duties.
A household employee might be employed on a full-or parttime basis, and due to their status as an employee, you owe them certain obligations as an employer. This is especially important when it comes to the question of taxation.
If your household employee ears more than $2,000 in a given year, you must pay their Social Security and Medicare taxes, at the rate of 15.3 percent of their cash wages. This equals the 7.65 percent that you owe as an employer and your household employee's 7.65 percent responsibility as an employee.
Furthermore, on the off chance that your household employee procures more than $1,000 in a year, you must pay their federal unemployment tax of 6 percent of cash wages, up to $7,000, and might be responsible to pay state unemployment tax too.
Household employee model
In the event that you work from home and run your own business with employees, they are not household employees. Rather, they are employees of your company.
Assuming you hire a nanny, however, to care for your kids during the workday with the goal that you can zero in on running your business, then your nanny is a household employee. Contingent upon her wages, you might owe Social Security, Medicare and unemployment taxes for the nanny's income.
Features
- Starting around 2020, all new household employees must finish up the reexamined W-4 form, however those hired before 2020 don't have to finish up a new form.
- Caretakers, babysitters, servants, and nursery workers are undeniably viewed as household employees.
- The IRS views a household employee as having work concluded by an employer and an independent contractor as having work defined by the worker.
- Household employees work and offer a wide range of assistance at their employer's place of residence.
