I have a domestic (nanny, elder care giver, housekeeper) working in my home. What taxes do I need to pay?
In general, the Internal Revenue Service requires payroll tax filings by a domestic employer (household employer) who pays a household employee more than $1900 cash wages (2014) in a calendar year. These nanny payroll taxes are collectively referred to as "nanny taxes", although as a practical matter these employment taxes are applied to all US employees. The employer's nanny payroll tax obligations may include:
- Social Security & Medicare Taxes (7.65% of Gross Wages) [FICA taxes]
- Federal Unemployment Tax (FUTA) (0.8% of Gross Wages or less in Most Circumstances)
- State unemployment and disability insurance taxes levied on the employer.
Examples of job titles that are typically considered household employees include nanny, babysitter, companion, housekeeper, cleaning lady (individual), maid, cook, personal assistant, senior caregiver, house manager, caretaker, butler, valet, and driver. We provide more information about distinguishing a household employee from an independent contractor here.
(* The wage payment threshold that obligates a family to pay the nanny taxes is indexed and has changed many times over the years.)