When a Household Employee Asks for a W-2 After Being Paid "Off the Books"

Many families who hire household employees, like nannies, senior caregivers, or housekeepers, may not realize they’ve become employers in the eyes of the IRS and labor authorities. It’s common for families to agree to pay "off the books" without thinking about taxes — until January rolls around and the employee asks for a W-2.

This exact situation happened with an adult daughter who called HomeWork Solutions looking for help.

The Situation

The caller helped hire a caregiver to assist an elderly parent living independently in an apartment. The caregiver worked 25 to 30 hours per week, helping with transportation to doctor appointments, light housekeeping, meal preparation, and general companionship. Most shifts were scheduled for weekday hours, but occasionally, additional time was needed for doctor visits or special projects.

The caregiver would text her hours, and the caller would log into her parent's bank account to send out a payment. The arrangement felt simple — no talk of taxes, just an agreed-upon hourly rate. Everything ran smoothly until January, when the caregiver inquired about a W-2.

The Challenge

The caller was surprised to learn that, by law, most household workers are classified as employees, not independent contractors. This means there’s a legal obligation to pay Social Security, Medicare taxes, and unemployment — something that hadn’t been done.

This meant:

• Filing back taxes: The caller’s parent was responsible for paying both the employer’s and employee’s share of Social Security and Medicare taxes since the employee’s half of these taxes hadn’t been withheld. Had the caller been aware of their parent’s employer responsibilities at the time of hire, half of social security and Medicare taxes could have been withheld from the employee’s pay, as is standard.
• Registering as an employer: The caller needed to obtain federal and state employer accounts for her parent in order to report and remit these back taxes, and future taxes properly.
• Filing a W-2 for the employee: The caregiver needed the form to file her own taxes. Legally, the employer was supposed to have this for the employee no later than January 31st, so now, time was short for compliance.

The caller was understandably overwhelmed. Navigating tax compliance for household employment wasn’t something she had ever considered until now.

The Solution

She reached out to HomeWork Solutions for guidance. Our team quickly assessed her situation and provided a step-by-step plan to get her parent on track.

Here’s how we helped:

1. Back Tax Filing: We assisted in calculating the unpaid employer taxes and explained the process for catching up on past obligations. The parent opted to have HomeWork Solutions do this work on her behalf.
2. Employer Registration: Our team took care of setting up the necessary federal and state employer accounts.
3. Payroll Compliance: To prevent future issues, the parent also enrolled her in our household payroll service. This ensures that the caregiver is paid with taxes properly withheld and that all required reports and payments to the IRS and state tax agencies are handled automatically.

While paying back taxes wasn’t something the caller’s parent had planned for, she appreciated having a clear path forward. By getting on a compliant payroll system, she could focus on things she enjoyed, knowing that the caregiver’s taxes were being managed properly.

The Lesson

If you’re paying a household worker directly, even for part-time help, you’re likely an employer in the eyes of the IRS. It’s important to set up payroll from the start to avoid surprises later. If an employee requests a W-2 after being paid “off the books,” it’s not too late to get on track.

With HomeWork Solutions, you get personalized support, simple enrollment, and ongoing payroll services that handle tax withholdings, W-2s, and more. If you find yourself in a similar situation, reach out to our team — we make it easy to catch up and stay compliant.

Need Help Navigating Household Payroll and Taxes?
Call HomeWork Solutions today, 1-800-626-4829, for expert guidance and stress-free payroll support. We’ve been helping families like yours for over 30 years.