Thank you so much for your response @ShirlynW @ I read the information from pub 926 that you posted, but my question is in regards to "Table 1. Do You Need To Pay Employment Taxes?" on page 5 as well as Page 6 "wages not counted." Table 1 shows the following
If you...
Pay cash wages of $2,600 or more in 2023 to any one household employee.
Don't count wages you pay to:
Your spouse,
Your child under the age of 21, Your parent (see Wages not counted, later, for an exception), or
Any employee under the age of 18 at any time in 2023 (see Wages not counted, later, for an exception).
Pay cash wages of $2,600 or more in 2023 to any one household employee.
Page 6 shows
Wages not counted. Don't count wages you pay to any of the following individuals as FUTA wages. Your spouse.
Your child who is under the age of 21. Your parent.
If I understand correctly, doesn't this mean my mother and I would be exempt from FICA/employment taxes? She would have to still pay income taxes but from what the IRS shows that should be all, right?
I also see similar verbiage in publication 15 (Circular E) Employer's Tax Guide to support the exception for parents on page 13 under "parents employed by their child."
When the employer is a child employing their parent, the following rules apply. Payments for the services of a parent in their child's (the employer's) trade or business are subject to in- come tax withholding and social security and Medi- care taxes.
Payments for the services of a parent not in their child's (the employer's) trade or business are gener- ally not subject to social security and Medicare taxes.
I just want to make sure because I don't want to get myself or my mother in any tax trouble. I also don't want to pay more for payroll services and taxes than what's required.
Thanks for any additional insight you may be able to provide 🙂
