Household Payroll Services
Do you or your family pay another individual to perform the following duties on a regular basis?
- Babysitters or Nannies
- Elder Care
- Home Care, Health Aides or Private Nurses
- House Cleaning Workers, Housekeepers or Maids
- Yard Workers
- Cooks and more
If you do, keep in mind that you may have to comply with unique requirements. If you pay $2,000 or more a year or $1,000 or more per calendar quarter to any of these individuals, the IRS (and if applicable, your state tax agency) considers you a household employer required to pay the household employment tax. To that effect, you need a federal and state tax identification number so you can report your taxes. Also, each pay period, you’re required to withhold the following:
- Social Security and Medicare, often referred to as FICA.
- Federal income tax.
- State income tax, if applicable.
You also need to pay a matching percentage of FICA, along with state and federal unemployment insurance taxes.**
We know calculating, filing, and paying your household employee’s payroll and taxes can be confusing, stressful, and time consuming. This often leads to individuals skipping it altogether, and instead pay in cash and “under the table” for these services. As tempting as it may be, it’s also illegal and may cost you thousands of dollars in back taxes, plus interest and penalties. In addition, you may be subject to tax evasion charges, and liability for employer and employee portions of Social Security and Medicare taxes.
Don’t shy away from doing things the right way and:
- Protect yourself as an employer.
- Avoid penalties and fines.
- Save time: We’ll automatically calculate wages and deduct the correct taxes.
- Eliminate the paperwork and deposits: We’ll file all the payroll paperwork and make deposits on your behalf.
- Offer pay options to your household employee with direct deposit or print checks.
- Help household employees build their employment history (important when it comes to Social Security and Medicare benefits).
- Ensure they can collect unemployment benefits if/when you no longer need their services.
*Unfortunately, we do not process payroll for household employees in the state of California.
** Important: Income tax rates are not the same from state to state. For example, some states don’t even have income tax. Knowing your state income tax rate will help you better understand your payroll obligations.