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You’ve Hired an In-Home Employee: What are Your Legal Responsibilities?

Posted by HomeWork Solutions on 12/17/20 11:30 AM
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Need a housekeeper, nanny, personal assistant, or estate manager to lend a helping hand in your home on a regular basis? Once you find the right person, you want to make sure that they stay employed with you for as long as possible. That means ensuring that everything is kept on the up and up – from communication, to a set payroll schedule, to tax withholdings. Hiring an in-home employee makes you a household employer. And you’ll need to be aware of what your legal responsibilities are. CPA and client photo-1

#1: You can’t pay your employee ‘under the table’.
Many people think that they aren’t required to pay taxes for their employee or keep a written record of their employment. This is false. Hiring an in-home employee and paying them ‘off the books’ is illegal and could be considered tax evasion if discovered. You need to protect yourself and the employee.

#2: Know the difference between an employee and an independent contractor.
This is a mistake many people make each year when they hire a new employee to work in their home. Independent contractors have no restrictions to their employment – they are their own boss. They are not subject to specific hours or job duties. So, if you plan on hiring a household employee that you expect to work specific days and times, with specific sets of job duties which you control, they are an employee and need to be paid as such.

#3: Know what you need to fill out when hiring an employee.
You have legal and ethical responsibilities as a household employer. You will need to get an employer identification number from the IRS, check to make sure that your employee is legally authorized to work in the United States, and begin paying employment taxes, including Social Security and Medicare. After all, they are entitled to retirement and unemployment benefits, just like any other employee.

We understand that being a household employer comes with a lot of complex rules you may find overwhelming. But never fear! Our tax and payroll specialists at HomeWork Solutions have the answers to your questions. Contact us today to find out how we can manage everything for you. That way, you will be confident knowing you and your employee are tax compliant all year long.

Topics: elder care, household employer, calculate nanny payroll tax, 1099 v w-2, domestic employer legal responsibilities, nanny tax compliance, household payroll, caregiver

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