If you hire individuals to work in your home, such as nannies, senior caregivers, or housecleaners, you are likely a household employer in the eyes of federal labor and tax authorities. This employment relationship means you're responsible for filing the proper taxes and providing the necessary paperwork to your employees if you pay them over $2,700 for the year (updated for 2024).
Essential Paperwork for Your Domestic Workers
As a household employer, you must provide your domestic workers with a W-2 form. This form shows how much you paid them throughout the year and how much tax was withheld from their paychecks.
For 2024, you'll need to file W-2s for each domestic worker who earns Social Security and Medicare wages of $2,700 or more or for whom you withhold income tax. Remember, W-2 forms should be filed and given to your employees by January 31, following the end of the tax year. So, wages paid during 2024 will be reported on a 2024 W-2 and given to your employees or postmarked by January 31, 2025.
You'll also send Copy A of Form W-2, along with Form W-3, Transmittal of Wage and Tax Statements, to the Social Security Administration (SSA) by January 31.
Paperwork You Need to File
Ensuring your employees receive W-2 forms is just one part of your tax paperwork requirement. You also need to report all wages paid to household employees on your yearend tax return and calculate employment taxes due, along with any Federal income tax you may have withheld, using Form 1040 Schedule H. This is necessary if you pay:
- Social Security and Medicare wages of $2,700 or more
- Wages from which you withhold federal income tax
- FUTA wages
Your Schedule H should be filed with your income tax return by the due date for that tax year.
If you don’t need to file an income tax return, you can file your Schedule H on its own.
What You Need to File Taxes
To fill out these forms, you’ll need your employee’s name and social security number (SSN) exactly as it appears on their social security card. Gathering this information before you start paying them wages is a good idea. Keeping detailed wage and tax records is essential for accurate filing. Good records will also save you time during tax season, as you’ll have all the numbers at your fingertips.
On paydays, make sure to record:
- Date
- Regular and overtime hours worked
- Total wages (both cash and non-cash)
- Social Security tax withheld
- Medicare tax withheld
- Federal income tax withheld
- State income and/or employment taxes withheld
- Any other withholdings
State Obligations
Besides federal requirements, most household employers must also handle state tax filings. This includes state unemployment tax (SUTA), any state income tax(SIT,) and any other employment taxes you've withheld. The reporting schedule varies by state but is typically quarterly. Filing late can lead to penalties and interest expenses, so staying on top of filing is essential.
Need Help?
If all of the above information felt a little overwhelming, you are not alone. Most household employers are surprised by their employer obligations. Talking to a professional can make things much easier if you're unsure about your responsibilities or need personalized advice. At HomeWork Solutions, we’re here to help you navigate the ins and outs of household payroll and tax compliance. We even have service plans that will do all of it for you. We aim to simplify your life so you can spend your time focusing on what matters most: your family.
For more information or assistance, contact our expert team. Let us take the worry out of your household payroll and tax needs.