When to Pay Taxes on Domestic Workers

Many employers don't realize that they should be paying taxes.

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The latest issue of Washington Consumers' Checkbook gives the lowdown on paying taxes to domestic workers -- an issue that has tripped up more than one Cabinet nominee. Here are some key facts:

  • The law requires anyone employing a household worker to fill out an "employment eligibility verification form," known as form I-9, to confirm that the employee is eligible to work in the United States. There's no need to turn in the form, but you must keep it on hand. (The form is available at www.uscis.gov.)
    • If you pay a household worker more than $1,600 per year, then you also must pay Social Security and Medicare taxes. This year, the rates are 6.2 percent for Social Security and 1.45 percent for Medicare. (In addition, unemployment taxes apply to anyone earning over $1,000 per year.)
      • These taxes are usually paid when you file your annual income tax -- so sometime before April 15. Just be sure to fill out a "Schedule H," as well as file W-2 and W-3 forms with the Social Security Administration.
        • Some states require employers of household workers to pay unemployment insurance taxes and workers' compensation insurance, so be sure to check with your state.
        • Consumers' Checkbook is a great resource for anyone looking for help in purchasing decisions, tailored to their local area. For more information, visit www.checkbook.org.