Are You Aware of the Household Employer Reporting Requirements?

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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