Like most businesses, employers of household workers (e.g., housekeepers, nannies, etc.) must pay federal and state payroll tax and have other reporting requirements. Federal reporting requirements typically include filing Form W-2 for any employee earning annual wages above a certain amount ($2,200 for 2020) and reporting any corresponding payroll taxes on Schedule H of Form 1040. State reporting requirements typically include, at a minimum, filing state unemployment tax returns. Texas employers, for example, generally must file state unemployment tax returns if they pay an employee $1,000 in any quarter of a given calendar year.
Fortunately, household employers have a few options that can simplify their reporting and payment obligations:
- Withholding federal income tax is optional with household employees
- Businesses typically must file Form 941 every quarter. However, household employers only have an annual reporting via Schedule H with their Form 1040
- Similarly, businesses typically must file a state unemployment tax return every quarter. However, many states, including Texas, offer the option to file annually
New employers of a household worker need to obtain a federal employer identification number and register with their state as a household employer. They also will want to verify an employee’s eligibility to work in the United States, by completing Form I-9, which is available on the U.S. Citizenship and Immigration Services’ website.
For more information or questions regarding these tax and reporting requirements, contact us. We're here to help.
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