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A household employee is a person hired to do specific work around an employer's home. There are different types of household employees who provide a wide variety of services. Having a household employee may require the employer to perform certain tax filing duties in order for the process to be legal. It is also important to remember that in most places, it is not legal to hire a household employee who does not have legal residence in the country.
With so many jobs to be done around the house, having household employees may sound like welcome relief. Some of the many tasks an employee may be hired to perform include babysitting, gardening, nursing, driving duties, and household cleaning. One worker may be in charge of several tasks; for instance, a maid might help with cooking, cleaning and babysitting.
If a person employs a household employee, he or she is generally considered the employer and may be responsible for certain tax liabilities. Usually, the employer is only responsible if he or she decides what tasks the worker will do and how they will be performed, using tools or equipment that belongs to the employer. A worker is considered self-employed if he or she offers the same general service to the public and provides his or her own equipment. If an employment agency provides the equipment and mandates the method of working, that agency is usually considered the employee.
Services performed in another person's home are generally not applicable to household employee taxes. For instance, day care given at an off-site location does not usually qualify for this tax consideration. Depending on the amount paid, these taxes also do not generally apply to any legal worker under 18, such as a teenage babysitter, or to a dependent child or family member paid to give care.
A person with household employees that qualify for tax status must usually pay Social Security, Medicare, and federal unemployment taxes. The employer may also be responsible for state taxes, depending on the jurisdiction. In some cases, federal income taxes must also be withheld.
It is important to read all state and federal tax laws regarding household workers before deciding to hire outside help. Paying additional taxes may change the assumed budget for wages for household staff. Be certain that funds are available to pay household workers before signing an employment contract, as failure to withhold taxes or fulfill terms of a work contract with an employee can be grounds for criminal and civil charges.
If someone is hired by a homeowner who runs a home daycare to take care of children from other families in that home daycare, is the person who was hired considered a "Household Employee?"