If you know Jeeves, he is the fictional character in the series of humorous (read rib-tickling funny) short stories by P.G. Wodehouse. Jeeves is a very, very capable valet who gets his employer, Wooster out of many a sticky situation.
My father introduced me to P.G.Wodehouse’s books and there was no turning me back after that. The brilliant comic genius’ writing has kept me enthralled through long train rides, boring summer afternoons, quick breaks in the midst of grueling exams, you get the drift!
Now we may not all be able to afford a Jeeves in our lives, but a very common trend these days is to hire a nanny or an “au pair” if one has small gifts. Considering the sky-rocketing day-care costs for young children, this does not seem such a luxury anymore.
Did you know that a nanny/au pair is considered a Household Employee? A nanny is not an independent contractor because you are telling them what they will do and how they will do things.
Read more about independent contractors in my post here.
You Have A Household Employee If:
You hired someone to do household work and that worker is your employee. This work can be part-time or full-time; you could have hired the person directly or through an agency; and you could pay him/ her hourly/daily/weekly or by job.
You have to make sure the person who is your employee is legally allowed to work in the U.S.
What Is Household Work:
Some examples of household work cover babysitting, care-taking, house-cleaning, drivers, health-aides, house-keeping, maids, nannies, private nurses or yard workers.
Employment Taxes For The Household Employee:
You may have to withhold social security, medicare taxes, federal unemployment tax and state taxes. But you do not have to withhold federal income tax on such employee.
Household Employer’s Checklist:
1. ID Numbers: You will need federal & state ID numbers to report the taxes withheld.
2. Payroll Information: The employee’s gross pay determines the taxes to be withheld, the pay period determines when the taxes are paid in to the government.
3. Forms: You have to provide the household employee with a Form W-2 by the end of January of the next year. And the taxes paid can be reported on Schedule H attached to your Form 1040.
4. Employee’s Information: You will have to collect their Social Security Number or ITIN on a Form W-4. And if need be their Form I-9 with proper identification.
The Internal Revenue Service expects that a family with a household employer can expect to spend 50-55 hours per year correctly managing this. This would be the best example to hire a professional to take care of the filings etc accurately & on a timely basis.
Bibliography: Publication 926; Schedule H.
Original Post By: Manasa Nadig