If you pay someone to come to your home to do household work, you may be a household employer. As a household employer you may be required to have an employer identification number (EIN) and pay payroll taxes, sometimes called nanny tax. Household work is work done in or around your home by babysitters, nannies, health aides, private nurses, maids, caretakers, yard workers, and similar domestic workers.
If you use a placement agency that exercises control over what work is done and how it will be done by a household worker, that person is not your employee. This control could include providing rules of conduct and appearance and requiring regular reports. In this case, you do not have to pay payroll taxes. But if an agency merely gives you a list of sitters and you hire one from that list, the worker may be your employee.
For the IRS, if you have a household employee you may be subject to:
- Social security and Medicare taxes
- Federal unemployment tax, and
- Federal income tax withholding
Social security and Medicare taxes are generally withheld from the employee’s pay and matched by the employer. Federal unemployment (FUTA) tax is paid by the employer only and is for the employee’s federal unemployment insurance. Federal income tax is withheld from the employee’s total pay if the employee asks you to do so and you agree.
For more information on a household employer’s tax responsibilities, see IRS Publication 926, Household Employer's Tax Guide and IRS Schedule H (Form 1040), Household Employment Taxes.
For California, a household employer must register with EDD after paying $750 in cash wages to one or more employees in a calendar quarter:
- 1st Quarter - January, February, March
- 2nd Quarter - April, May, June
- 3rd Quarter - July, August, September
- 4th Quarter - October, November, December
The DE 1 HW Registration Form can be mailed or faxed to EDD.
As a household employer, you may be subject to:
- Unemployment Insurance (UI)
- Employment Training Tax (ETT)
- State Disability Insurance (SDI)
- Personal Income Tax (PIT) withholding
SDI is withheld from the employee’s pay. PIT is withheld from the employee’s pay if the employee asks you to do so and you agree. UI and ETT are paid by you, the employer, after paying $1,000 or more in total cash wages in a calendar quarter.
For more information, see EDD's DE 8829, Household Employer's Guide, and DE 231L, Information Sheet: Household Employment.