How to Determine if You Have Household Employees

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Do you have household employees?

Do you have an individual that comes to your house routinely to handle such tasks as house cleaning, gardening, cooking, babysitting or any other position that personally supports you? If you pay this individual more than $1900 a year then the IRS recognizes the relationship as an employee/employer. This does not apply if you are hiring these services from a third party company.

Are you treating this relationship properly? How do you know if you are?  The IRS defines a household employee as someone hired to do work in or around a home, at the direction and control of the person who lives in the home.

As an employer, you should be withholding tax from the paychecks. If you are not withholding payroll taxes then you are out of compliance and you will owe back taxes plus penalties. If you have been treating the relationship improperly, it is fairly easy to begin a household employee payroll system. There are many payroll services that can help you by processing the payroll to save you the time and energy with calculating payroll taxes and remittance to the state.

If you have questions about determining the relationship of a worker, please don’t hesitate to contact me.

Copyright 2014 Christi Rains, Alpha Omega Consulting & Bookkeeping, LLC  www.aobookkeeping.com

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