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Household Employees and Payroll Reporting Requirements

A household worker such as a babysitter, nanny, maid, or health care provider may be an employee of the homeowner. The worker is generally an employee if the homeowner can control not only what work is done, but also how the work is done.

If wages of $1,700 in a calendar year are paid to a household employee the IRS requires the following:

  • Form I-9 verification must be completed
  • Form W-2 be filed
  • Filing of Schedule H form 1040 to report and pay FICA, FUTA and any withheld taxes

Most states also require state unemployment taxes be paid on a quarterly basis.

Federal payroll taxes due for household workers is added to your individual income tax return and may cause a need to pay quarterly estimated tax payments to avoid late payment penalties.

I highly recommend using a payroll service provider to handle the tax reporting requirements.

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