Parent as a household employee

Forum|Forum|2 years ago
April 25, 2024
3 replies
14 views

Hello!My mother is a household employee for me and my husband. She watches our kids. Our CPA created an EIN number under my husbands name. Even though technically she is not his mom, but mine, will we be exempt from SS, medicare and unemployment taxes? Or does EIN need to be changed to

my name. CPA is saying that it doesn’t matter since it’s the same household. How and when will the relationship between us and mom need to be proven? Thank you

Opus 17

Level 15

You don't need an EIN at all. For a joint return, you are "one taxpayer" (more or less) so it doesn't matter which spouse the employee is the parent of.

Because the household employee is your (one of your) mother's, you are not required to withhold or pay household employee tax (social security and medicare tax). Because you do not withhold social security and medicare tax, you are also not required to issue a W-2 for her household employee wages. And that means you don't need the EIN.

(If you withheld federal or state income tax, then you would issue a W-2, even though boxes 3-6 would be blank, and then you would need the EIN. You would also need to file form 941 or 944 to report and pay the quarterly federal income tax withholding to the IRS. But this is a lot of work you don't need to do. It would be far easier to just pay your mother and let her make estimated tax payments, if required.)

As a household employee without a W-2, your mother would report the wages on line 1b of form 1040, "household employee wages not on a W-2." Turbotax includes this in the standard interview.

OxanaDAuthor

Level 2

Thank you soooo much!Since we didn’t know this we already have an EIN under my husband’s name and issued her W2 for last year’s taxes. We didn’t know that it had to be filed quarterly for last year. We were about to file 941 for this year’s first quarter. Should we not do that and just file 1040 at the end of the year and that’s it?Or should we continue to file quarterly with basically just income tax?And EIN under my husbands name is ok in this case too?Thank you again!

DMarkM1

Level 15

No don't file the 941. Instead of withholding taxes (federal and/or state) and having to file W2s annually, 941s quarterly and state quarterly reports, don't withhold and just have your mother pay her quarterly taxes. Then when she does her tax return she'll report the income (you paid her) as wages not reported on a W2. She would also report the quarterly taxes she pays to get those payments credited on her return.

You can use the payments you are making to her a expenses for the childcare credit on your return.

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andreglok

Level 2

Did you ever figure out the correct way for your mom to handle taxes as your household employee? I am on the same boat right now and trying to decide if I need to withheld all the FICA, FUTA and SUTA taxes. Any feedback is greatly appreciate it.

Monikak11

Level 2

Generally, you don't have to withhold employment taxes if the household employee is your parent. However, you do have to count their wages as being subject to FICA, FUTA and SUTA if both of these conditions apply:

Count wages paid to your parent if both the following conditions apply:

Your parent cares for your child (including an adopted child or stepchild) who's either of the following:
- Under the age of 18
- Has a physical or mental condition that requires the personal care of an adult for at least 4 continuous weeks in the calendar quarter services were performed
Your marital status is one of the following:
- You’re divorced and haven't remarried
- You’re a widow or widower
- You’re living with a spouse whose physical or mental condition prevents them from caring for your child for at least 4 continuous weeks in the calendar quarter in which the services were performed

Please see this help article, this tax tips article, and IRS Publication 926 for more information.

@andreglok

andreglok

Level 2

thanks for the response.

Only condition 1 applies to our household, so how will she file her taxes and how do we show the income she has receives from us?

Monikak11

Level 2

If only one of the two conditions applies, then you don't need to withhold payroll taxes on your parent's wages as a household employee.

You must file Form W-2 for each household employee to whom you paid $2,700 or more of cash wages in 2024 that are subject to social security and Medicare taxes. Since you don't withhold social security and Medicare taxes, you don't have to file a W-2 unless you withhold income taxes.

The household employee is still responsible for reporting their wages and filing an income tax return even if they did not receive a form W-2. This is done by completing IRS Form 4852, Substitute for Form W-2. A return that includes this form would need to be filed by mail.

@andreglok