If you pay someone to come to your home and care for your dependent
or spouse, you may be a household employer. If you are a household
employer, you will need an employer identification number (EIN) and
you may have to pay employment taxes. If the individuals who work in
your home are self-employed, you are not liable for any of the taxes
discussed in this section. Self-employed persons who are in business
for themselves are not household employees. Usually, you are not
a household employer if the person who cares for your dependent
or spouse does so at his or her home or place of business.
If you use a placement agency that exercises control over what work
is done and how it will be done by a babysitter or companion who works
in your home, that person is not your employee. This control could
include providing rules of conduct and appearance and requiring
regular reports. In this case, you do not have to pay employment
taxes. But, if an agency merely gives you a list of sitters and you
hire one from that list, the sitter may be your employee.
If you have a household employee you may be subject to:
- Social security and Medicare taxes,
- Federal unemployment tax, and
- Federal income tax withholding.
Social security and Medicare taxes are generally withheld from
the employee's pay and matched by the employer. Federal unemployment
(FUTA) tax is paid by the employer only and provides for payments of
unemployment compensation to workers who have lost their jobs. Federal
income tax is withheld from the employee's total pay if the employee
asks you to do so and you agree.
For more information on a household employer's tax
responsibilities, see Publication 926
and Schedule H (Form 1040) and
its instructions.
State employment tax.
You may also have to pay state unemployment tax. Contact your state
unemployment tax office for information. You should also find out
whether you need to pay or collect other state employment taxes or
carry worker's compensation insurance. A list of state unemployment
tax agencies, including addresses and phone numbers, is in Publication 926.
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