Hiring a nanny or a housekeeper to help you out at home, a personal assistant to keep you organized, a senior caregiver to help you out with your aging parents, a gardener, cook or any other household worker to whom you pay directly (more than $1800 in calendar year 2013, $1900 in calendar year 2014) and you control the way the work is done and how, makes you a household employer!
According to the IRS's Publication 926 household employers who pay a worker more than $1800 cash wages in a calendar year, are required to file payroll taxes.
Payroll tax obligations may include:
- Social Security & Medicare Taxes (7.65% of Gross Wages) [FICA taxes]
- Federal Unemployment Tax (FUTA) (0.6% of the first $7000 Gross Wages per employee)
- State unemployment and disability insurance taxes levied on the employer.
Be informed. Misclassifying an employee with an "Independent Contractor" and issue a Form 1099 vs. a W-2 is a very common mistake and carries costly risks to both the household employer and to the worker herself. Learn more about distinguishing a household employee from an independent contractor here.