Have you recently hired a housekeeper, nanny, private tutor, chef, senior caregiver, or another type of domestic employee? It’s no secret that keeping up on the tax rules, laws, and other regulations that come with having a household employee can be confusing. Here are some of the most important details you need to know about your employee’s taxes this year.
The first important thing to remember is that if you pay your household employee at least $2,300 in 2021, you will owe taxes. That means you will need to withhold and remit Social Security and Medicare taxes to the IRS. There are specific percentages that you will need to withhold to avoid penalties. Don’t forget that you need to pay at least minimum wage. You don’t need to count wages that were paid to a parent or an employee that is under the age of 18.
Next, if you hire a household employee and pay them $1,000 during a calendar quarter, you will also owe federal unemployment taxes. You may also own state unemployment taxes, depending on which state you live in.
If you plan on having your employee work overtime hours, they must be compensated for this. Household employees are covered by the Fair Labor Standards Act. That means employers need to pay them at least time and a half for over 40 hours in any given workweek. If you have a live-in employee, they may be exempt from overtime pay requirements. However, some states have their own overtime laws for these types of employees, so make sure to do your research.
And last, make sure you are aware of what other state labor laws or paid sick leave laws may apply to your household employee. Neglecting this information could pose a problem for you down the road.
Not sure how to handle all of these requirements? That’s okay. Household Staffing partners with several payroll service companies including GTM Payroll and HomeWork Solutions to ensure your employees are paid on time and accurately. In the meantime, talk with one of our household employment experts to get details on the requirements you have as an employer. Contact us today to find the right employee for your home and to get the hiring process started!