Employment Taxes for Household Employers

Did you know that if you pay someone to come in your home and care for your dependents or spouse, you may be a household employer. If you are a household employer, you will need an EIN (employer identification number) and you may have to pay employment taxes. If the indivuduals who work in yout home are self-employed, you may have to pay employmentsw taxes. If the individuals that 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 the business fot 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 is in control of what work is done and how it will be done by a babysitter, then this person is not your employee (in the household). 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:
1.Social security and Medicare taxes
2.Federal unemployment tax,
3.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 withheld from the employee's total pay if the employee asks you to do so and you agree.