Household employees include housekeepers, maids, babysitters, gardeners, and anyone else who works for you in or around your home. Contractors, handypersons, and others who supply services independently are not considered employees. If you can direct the tasks and methods of your housekeepers, you can view them as employees.
Taxes for Medicare and Social Security (Federal Insurance Contributions Act – FICA) Both employees and employers must contribute 7.65 percent of their salary to the Federal Insurance Contributions Act (FICA) tax, which funds social security and Medicare programs. The employer typically handles wage withholding for the employee's portion of the FICA tax.
You are required to withhold 6.2% of social security and 1.45% of Medicare taxes (for a total of 7.65%) from all cash wages paid to any employee in your household who earns $2,400 or more in 2022 (this threshold can change from year to year) unless you choose to pay your employee's share of social security and Medicare taxes from your funds. 7.65% of your gross earnings is withheld for Medicare and Social Security (cash wages include wages you pay by check, money order, etc.).
Monetary Amounts and Percentages in Question
The monetary amounts and percentages in question can be found in Publication 926, Household Employer's Tax Guide, under the heading "Do You Need To Pay Employment Taxes?" Make a payment to the Internal Revenue Service (IRS) equal to the amount you withheld plus 7.65%. If you cover your workers' social security and Medicare costs out of your pocket, those payments will be considered taxable wages. They should not be included in calculating Social Security, Medicare, or the federal unemployment tax.
Unless exceptional circumstances apply, your parent, or An employee who, at any point in the year, is younger than 18 years old, unless caring for younger children is the person's primary job. Household work is not regarded as a student worker's primary occupation. Information on these exemptions can be found in Publication 926PDF.
Tax Increase for Medicare
When an individual's Medicare wages are above a certain threshold based on their filing status, they must pay an additional Medicare tax. Employers must withhold the 0.9% Additional Medicare Tax from an employee's wages over $200,000 in a calendar year, regardless of the employee's tax filing status. Any time a company pays an employee more than $200,000 in a calendar year, they must start withholding.
Additional Medicare Tax from the employee's paycheck in the following pay period will continue until the end of the year. Employers do not match extra Medicare contributions. Please refer to the Additional Medicare Tax FAQ and Instructions for Form 8959 for further details.
Payment of Federal Income Taxes Owed
If you have an employee working in your home, you do not have to withhold federal income tax from their pay. If an employee requests that federal income tax be withheld from their salary, and you agree to do so, you will need to have them fill out a W-4 and Employee's Withholding Certificate. You can find up-to-date tax withholding tables in Publication 15-T, Federal Income Tax Withholding Methods, if you need up-to-date tax withholding tables.
Wage and Tax Receipt Statement Form W-2
Employer identification number (EIN) and employees' SSNs are required to finish Form W-2. Apply for an EIN online if you haven't already done so.
This support is on hand from 7:00 am7:00 am7:00 am7:00 am to 10:00 pm10:00 pm10:00 pm10:00 pm (Eastern) Monday through Friday. If you prefer to apply for an EIN by mail or fax, you can fill out Form SS-4, Application for Employer Identification Number. Foreigners can apply for an EIN by contacting the local number (not a toll-free one) 267-941-1099 between the hours of 6 am6 am6 am6 am, and 11 pm11 pm11 pm11 pm Employer Identification Numbers (Topic 752) and Employee Identification and Verification (Topic 755) have more details.
Taxation of Earnings While Unemployed (FUTA)
In most cases, employers are required to pay federal unemployment tax (FUTA) on the first $7,000 in cash wages paid to each household employee if they paid out more than $1,000 in cash compensation to those employees in any calendar quarter during the calendar year or the prior year. Wages paid to a spouse, minor child, or parent are disregarded. In addition, you shouldn't count the money you hand over to them as taxable FUTA earnings. Amounts paid into state unemployment funds are generally deductible from your federal unemployment tax assessment (FUTA). Your FUTA tax credit may be lowered if you paid wages covered by the unemployment insurance legislation of a state that offers credit reductions.
