Household Help? Here's What To Know About Taxes
If you pay someone to work in your home — even part time or occasionally — they may be considered a household employee by the IRS. This means you could be responsible for Social Security, Medicare and unemployment taxes, along with other filings.
Who counts as a household employee?
A household employee is someone you direct — meaning you control both what work is done and how it’s done –– and who uses supplies and tools that you provide. This includes:
- Nannies
- Babysitters
- Housekeepers or cleaners
- Gardeners
- Other workers performing in-home services under your direction
For example, if you pay someone to babysit and tidy up, using supplies that you provide, four mornings a week, that person is your employee, even if the arrangement feels informal.
Not everyone who works for you qualifies as an employee. You’re generally not responsible for employment taxes if the worker:
- Runs their own business (e.g., a landscaping company)
- Uses their own tools and offers services to the public
- Is a repair technician or other independent contractor
You also don’t owe employment taxes for:
- Your spouse
- Your child under age 21
- Your parent (with some exceptions)
- Any employee under age 18, unless household work is their primary occupation
If you are unsure, a CPA can help you determine employee status.
Tax requirements for 2025
If you pay $2,800 or more in cash wages to any one household employee in 2025, you’re required to pay Social Security and Medicare taxes at a combined rate of 15.3% of their wages:
- 7.65% is the employee's share (which you may pay on their behalf)
- 7.65% is your share as the employer
You must also pay Federal Unemployment Tax Act taxes, which are 6% on the first $7,000 of wages per employee. Wages beyond $7,000 aren’t subject to FUTA. Additionally, you may owe state unemployment tax, depending on where you live.
An additional 0.9% Medicare tax applies to wages over $200,000.
Federal income tax withholding is optional unless the employee requests it and you agree
What counts as wages?
Cash wages include payments made by check, money order, Venmo, gift card and similar cash or cash equivalents. Cash wages do not include the value of food, lodging, clothing or transit passes. However, if you give cash to your employee in lieu of those items, that cash would count as taxable wages.
Noncash wages typically aren’t subject to Social Security or Medicare taxes, but they may still be subject to federal income tax unless specifically excluded.
Filing requirements
If you pay household wages subject to FICA or FUTA, or if you withhold federal income tax, you’ll need to file Schedule H, Household Employment Taxes, with your Form 1040.
Given the complexity and potential penalties, it’s wise to consult a CPA or payroll tax specialist. A payroll tax service can be particularly helpful if you employ multiple workers.
Employment eligibility
When you hire a household employee to work for you regularly, you and the employee must complete the U.S. Citizenship and Immigration Services Form I-9, Employment Eligibility Verification. You will examine documents, as outlined on the form, that the employee presents as evidence of their identity and employment eligibility. Keep the completed form with your business records so it is available for review if required by the government.
Household employment tax rules can be complex, but with the right help, you can meet your responsibilities and avoid penalties. A CPA or payroll service can walk you through every step.
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