If you employ someone to work in or around your home, age 18 or older, and pay them wages of $1,700 or more in 2010, you may be a household employer.
If you hire someone to do household work and you are able to control what work he or she does and how he or she does the work then you have a household employee. This is true even if you give the employee freedom of action. What matters is that you have the right to control the details of how the work is done. Some examples of workers who do household work are: Babysitters, Caretakers, Cleaning People, Drivers, Health Aides, Housekeepers, Nannies, Private Nurses and Yard Workers.
For example: You pay Brittney Jones to baby-sit your child and do light housework 4 days a week in your home. Brittney follows your specific instructions about household and childcare duties. You provide the household equipment and supplies Brittney needs to do her work. Brittney is your household employee.
If you have a household employee, you should distribute a W-2 to the employee by January 31st each year and file a W-2 with the Social Security Administration by February 28th. You also need to Pay 12.4% FICA plus 2.9% Medicare with your Annual Form 1040 on Schedule H on or before April 15th.
If you pay total wages of $1,000 or more in any calendar quarter to household employees then you need to:
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- File quarterly State Unemployment Reports with Form NCUI 101 to pay the state unemployment tax. You can apply for an account number at http://www.ncesc.com.
- File annual Federal Unemployment Reports with your Form 1040 on Schedule H on or before April 15th each year.
Did you withhold any Federal or State Income Taxes from your household employees? (You are not required to withhold federal and state income tax from wages you pay a household employee. You should withhold tax only if your employee asks you to withhold and you agree to do so.) If so, you need to:
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- Pay Federal Income Tax withheld with your annual Form 1040 on Schedule H on or before April 15th each year.
- Pay State Income Tax withheld each quarter with Form NC-5 Quarterly Withholding Tax Payment Forms. You can apply for an account number using Form NC/BR with the NC Department of Revenue.
If household employees don’t meet the minimum filing requirements of $1,700 they must report the income they earned on their Form 1040 even if they don’t receive a W-2.
See IRS Publication 926 – Household Employer’s Guide For Wages Paid in 2010 for further information.
If you have a household employee that you have paid or will pay $1,700 or more this year, Blackman and Sloop would be glad to help you with all the proper paperwork and government filings. Just give us a call!
About Blackman & Sloop CPAs, P.A.:
Blackman & Sloop is a full-service CPA firm headquartered in Chapel Hill, North Carolina and is actively involved in auditing, taxation, management consulting, financial planning, and related services. The firm directs a large part of its services toward providing management with advice on budgeting, forecasts, projections, financing decisions, financial analysis, and tax developments. The firm also performs review and compilation services and prepares not-for-profit, corporate, individual, estate, retirement plan, and trust tax returns as well as technology consulting services regarding installation and training on QuickBooks. Blackman & Sloop provides services in Raleigh, Durham, Chapel Hill, RTP, Hillsborough, Pittsboro, Charlotte, and the rest of North Carolina. We are an independent member of the BDO Alliance USA. To find out more please visit http://www.blackmansloop.com
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