When we hired our first nanny, we spent a lot of hours and money to figure out the process of becoming a household employer. There are multiple service providers that can manage the process for you.
What is a Household Employee
- Household employees are individuals who are paid to provide a service within a residence. Some examples include nannies, drivers, yard workers, and housekeepers. Household employees exclude independent contractors such as plumbers and handymen
- The IRS defines household employees as someone who has been hired to do household work. That individual is your employee if you can control not only what work is done, but how it is done. Read more here.
- Individuals who perform work on either a full time or part time basis
- Any worker, regardless of how the worker was recruited. That includes employees hired through an agency, from the referral of a friend, through an association, or otherwise
- Includes workers paid on an hourly, daily, or weekly basis, or by the job
Payroll Companies Specializing in Household Employees
Tax and Regulatory Guidelines
The following is only as a guideline. Always consult with a tax advisor and/or the IRS website for any updates to the requirements related to hiring a household employee.
- Complete the U.S. Citizenship and Immigration Services (USCIS) Form I-9, Employment Eligibility Verification no later than the first day of employment. The Form I-9 is not submitted to the IRS or other entity. It must be maintained in your records and be available for review upon notice by an authorized U.S. Government official
- Contact your state unemployment tax agency to determine whether any state unemployment tax will need to be paid for your household employee. You can find a list of agencies at the U.S. Department of Labor’s website
- You should also determine if you need to pay or collect other state employment taxes or carry workers’ compensation insurance
- If you have a household employee, you may need to withhold and pay social security and Medicare taxes, pay federal unemployment tax, or both
- Find more information from the IRS in Publication 15-A, Employer’s Supplemental Tax Guide and on the IRS website
Other Matters to Consider
Have you had any experience retaining a vendor to help you with the process of becoming a household employer? We would love to hear from you. Send us your comments, or start a new forum to engage other Motherly.Life members.