Do employment taxes apply to household workers?

Some families may retain household employees that work year-round, including maids, nannies and yard maintenance workers. Depending on a number of factors, namely the amount of wages that are paid out, homeowners may be required to pay employment taxes during filing season.

Most families will not be required to submit Form 1099 to household workers who may be considered employees - but they may, in turn, need to provide a W-2 form and wage and tax statements. In addition, the homeowner may be required to withhold and pay employment taxes on workers who fall under the definition of an employee.

According to federal tax rules, homeowners are required to withhold Social Security and Medicare taxes from employees who are paid cash wages amounting to more than $1,700 in a given tax year. This requirement does not apply to certain workers, including a homeowner''s spouse, their child who is under the age of 21, a parent (in most cases) and employees under the age of 18. For the latter worker, a certain condition applies. If the worker under the age of 18 is retained as a household employee and the position is his or her principal occupation, the wages should be counted.

If homeowners determine that they must withhold and pay Social Security and Medicare taxes, they will need to issue a W-2 form to employees. They will also be required to file Household Employment Taxes via a Schedule H on their individual income taxes.

Homeowners should keep in mind that federal and state tax laws may differ when it comes to employment taxes, especially those relating to household workers. Speaking with a tax preparer upon hiring a household worker will allow a consumer to gain more insight into their specific employer/employee situation and determine whether or not they will be required to pay state taxes as well.

Household employers should also ask a tax preparer what records they will need to establish and maintain and any other procedures they may need to follow with regard to securing an Employee Identification Number and making sure that the individual is legally entitled to work in the U.S. Employers should also make sure they know the correct government organizations to which they will be submitting tax documents and payments.


Liberty Tax Service provides computerized income tax preparation and electronic filing. Each tax office offers customers audit assistance, a money back guarantee, and free tax return checking.