“Do I have an employee?” Some tax & payroll tips for household employers
If you’re about to hire a household employee or already have existing household staff, here are a few things you should keep in mind regarding the payroll & tax process:
- The person you have hired will be considered your “employee,” and you will be considered to be their “employer.” Treating them as being “self-employed” or as a “1099” contractor is difficult and risky. The IRS sets out its guidelines in Publication 926 (“Household Employer’s Tax Guide”). In particular, the IRS presumes that that such helpers as “babysitters, … house cleaning workers, housekeepers, [and] nannies” are employees, not self-employed. Being self-employed requires that the worker can control how their work is done. This can be a complicated legal area, and T+C strongly recommends that you get sound legal advice before trying to engage a household worker as a contractor.
- As an employer, you have payroll, tax and other legal requirements that you, as the employer, must administer. These obligations can be confusing at first, but options exist to make this process easy for you. We are happy to talk you through these options.
- We recommend that you have a work agreement or other written contract with your household employee so that this process can run more smoothly from the beginning.
- You should be aware of wage, overtime, meal and break rules as they apply for your household employee. These rules can vary based on the type of duties your employee performs and whether they are live-in or live-out, and unfortunately these rules change from time to time. Again, some sound legal advice and a good written work agreement will go a long way towards avoiding future surprises.
Town + Country knows that as a Household Employer, you may not know how to go about taxes, payroll and wage rules for your household. We can help guide you, including providing options and other resources for setting up & maintaining a good employment relationship with your household employee, and helping you to meet your legal obligations. We’re here to help, and would value the opportunity to talk.