If you employ someone to work in your home, and they earn more than $1700 during the year, you are a household employer and are responsible for the following:

Taxes:

  1.  One-half of your employee’s Social Security and Medicare taxes. This equals 7.65% of his/her gross salary. 
  2.  Federal and state unemployment insurance taxes.
  3. Other state/local taxes which vary from state to state.
  4. State and federal income tax withholding if your employee requests that these be deducted from his/her check.

Worker’s Compensation Insurance:

The requirements for worker’s comp insurance are different for every state. In any case, we recommend that you purchase a policy so you are covered if your employee is injured on the job.

Reporting:

  1. State unemployment insurance, income tax withholding, and any other state/local taxes are typically reported and paid quarterly.
  2. A W-2 for each employee is done at year-end and submitted to the Social Security Administration with a form W-3. The W-2 also is given to each employee and in some cases filed with the state. In addition, a Schedule H is filed with your personal tax return.