Yes, you can take a credit for the amount you pay her. If you choose, you can treat her like an employee.
You have a household employee if you hired someone to do household work and that worker is your employee. The worker is your employee if you can control not only what work is done but how it is done. If the worker is your employee, then it does not matter whether the work is full-time or part-time nor that you hired the worker through an agency or from a list provided by an agency or an association. It also does not matter whether you pay the worker on an hourly, daily, weekly, or by the job.
Household work is work done in or around your home by the following people:
- Babysitters
- Caretakers
- Cleaning people
- Domestic workers
- Drivers
- Health aides
- Housekeepers
- Maids
- Nannies
- Private nurses
- Yard workers
If you pay a household employee cash wages of $2,300 or more for 2021, then you need to withhold and report both Social Security and Medicare taxes from their pay. You generally must withhold 6.2% of Social Security and 1.45% of Medicare taxes (for a total of 7.65%) from all cash wages you pay to that employee. You also must pay your share of Social Security and Medicare taxes, which is also 7.65% of cash wages. (Cash wages include wages you pay by check, money order, etc.) Unless you prefer to pay your employee's share of Social Security and Medicare taxes from your own funds, you should withhold 7.65% from each payment of cash wages you make to the employee and pay this amount, along with your matching share, to the IRS.
Additional filing requirements might include Federal Unemployment Tax (FUTA), State Unemployment Tax (SUTA), and Forms W-2 and W-3 for any federal withholding that you did during the year. Also, you'll need to file Schedule H, Household Employment Taxes, with your individual tax return.
[Edited 2/15/2022|9:00AM PST]
