Household Employment Taxes

When someone needs assistance in their home, they can obtain the needed services through an organization in the business of providing such assistance or contract directly with an individual. While dealing directly with an individual may seem the most cost effective, there may be other considerations.

Paying an agency directly for household assistance eliminates any worry of employment taxes. If an individual works for a person directly (not through an agency), and receives compensation in excess of $1,100 in a given year, they would most likely be considered a household employee. Having household employees entails withholding taxes, maintaining payroll records, and may require filing reports similar to that of a business. It is also necessary to file a Federal Income Tax Return annually, to reflect household employment and taxes withheld.