Wage Test Increases for Domestic Employers

Effective for fiscal year 2006, the wage test that obligates the nanny employer (or any household employer) for the withholding and remittance of Social Security and Medicare taxes increases to $1500 of wages paid in the calendar year.

The Internal Revenue Service will require payroll tax filings by a any domestic employer who pays a household employee more than $1500 cash wages in a calendar year 2006.

Legislation enacted in 1994 dramatically modified the tax code, changing both the way the household employment taxes are remitted to the IRS, the potential penalties for non-compliance, and the amount of wages paid to obligate the employer for the remittances. Congress made provisions for periodic adjustments of the wage test that obligates the household employer to remit Social Security and Medicare taxes on wages that they pay their household workers. Until 1994 the wage test obligated employers who paid a household worker $50 or more in a quarter to Social Security and Medicare (FICA) taxes. View historical values.