Do I have to pay taxes on what I pay to my Household Employee?

People who work around your house under your direction are generally household employees. These include housekeepers, maids, babysitters, gardeners, and others. Contractors (like repairmen or plumbers) and other business people who work for you as independent contractors aren't your household employees. The main difference is that you control what household employees do and how they do it.

If you pay a household employee cash wages of $2,700 or more for 2024 (2,800 or more for 2025), 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 are also 7.65% of cash wages.

Cash wages include wages you pay by cash, check, or money order. 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.

There are some exceptions to these withholding requirements, including payments made to:

• Your spouse
• Your child who's under age 21
• Your parent, unless an exception is met (see below)
• An employee who's under age 18 at any time during the year, unless this work is their principal occupation; if they're a student, this work isn't considered their principal occupation

Exception for parents:

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

1. 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
2. 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

See IRS Publication 926 for more information.

You aren't required to withhold federal income taxes from your household employees' pay, but you can. If you and your employee agree to do this, IRS Publication 15 Circular E, Employer’s Tax Guide can guide you through this process.

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.

TurboTax Deluxe and above editions will help you with any household workers.