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Why Paying Your Household Employee Under the Table is a Bad Idea

Posted by HomeWork Solutions on 12/6/22 11:00 AM
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Hiring a household employee to work in your home is a big decision. It requires carefully selecting someone not only that you trust, but that fits your family’s needs. Once you’ve found the right person, it’s common to have questions about your responsibilities as a household employer.

If you will be paying your household employees more than $1,000 in a year, you will need to pay unemployment taxes. If you plan on paying your new household employee more than $2,400 in wages this year (2022), you are also required to pay Medicare and Social Security taxes. Most states require employers to file taxes quarterly, but this can vary depending on the state and amount of wages paid.

While the inner workings of taxes and payroll for your employee can feel confusing and overwhelming, don’t be tempted to pay them "under the table" or "off the books." Many new household employers think this is a convenient way to save time and money. But in fact, doing this could have costly consequences– especially if your employee gets hurt on the job, or files for unemployment benefits later.

Nanny and caregiving jobs are temporary in nature. As children grow up, or your elderly family member doesn’t require the same level of care, your employee’s job will end. Can you ensure they won’t need unemployment benefits while they look for a new job? To avoid hefty fines or disturbances with the IRS, you will need to stay tax compliant for the duration of your household employee’s employment with you.

Not sure how to properly withhold the right amount of taxes from your employee’s paycheck, or how to remit your employer and employee taxes? Signing up for HomeWork Solution’s household payroll and tax preparation service provides important peace of mind that your taxes and payroll are filed accurately, so there are no hidden tax surprises later. We’ll get you registered with tax authorities, and make sure payroll and taxes are taken care of all year long.

Avoid paying late fees and penalties by staying tax compliant from the very beginning. To get started, contact our experienced team today at 1-800-626-4829 or info@homeworksolutions.com.

Topics: nanny, agency, senior, CPA

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