If you hire someone to work in your home, such as a nanny to
watch your children, a gardener, or anything in between, you immediately become
what is known as a “household employer.” As such, you have to follow the laws
that govern how employees should be treated and taxed.
FICA Taxes
To start off with, you should be aware that, in some
situations, you will need to pay FICA taxes for your domestic workers.
The rule is that if you pay your household worker more than
$1700 per year, you have to pay FICA taxes on that worker. Not doing so can get
you in serious trouble, so find out if you’re required to pay FICA taxes and,
if so, talk with a tax adviser to learn how to determine and pay your FICA tax
amount.
Paperwork
In addition to paying all the right taxes, you also need to
complete all the right paperwork when you make the decision to hire a domestic
worker or workers.
A few of the things you’ll need to take care of,
paperwork-wise, include getting a federal employer identification number,
verifying that your employee is eligible to work in the United States via Form
I-9, and registering with your state as an employee.
All of that may seem like a lot to handle, but it’s all
necessary if you want to have people working in your home, and the good news is
that a tax professional can easily walk you through all of the paperwork and
even do some of it for you.
As you can see, there’s a lot of work that goes into hiring
and having domestic help. However, it’s well worth it in the end! Just find a
qualified financial professional to help you legally hire and pay your
household employees, and everything should go smoothly!