It's that time of year for parents. School is out, the kids are home, and you still have to go to work. For many households, this means it is time to consider hiring summer childcare, e.g., nannies, babysitters, or au pairs to watch the kids during the workday. Because the era of paying the teenager across the street or down the block $10 an hour for eight hours a day is gone, we offer the following reminders to parents who go the route of hiring summer help directly.
- Determine whether you have a household employee. The general rule is that if you directly hire someone to work in your home and you control when, where, and how his or her work is done, you are most likely an employer (at least part-time). For example, if you hire a nanny to come to your house, be there from 9am-5pm, and feed breakfast at 10am and lunch at 1pm, the government will likely consider you a household employer.
- If you are a household employer, you may need to pay employment taxes, including social security, Medicare, and federal/state unemployment taxes. For 2016, if you pay cash wages of $2,000 or more to a household employee, you must withhold and pay social security and Medicare taxes. If you pay total cash wages of $1,000 or more in any calendar quarter of 2015 or 2016 to household employees, you must pay federal unemployment tax (depending on where you live, you may also be required to pay state unemployment tax).
- To pay your household employee and the applicable taxes, you will need to obtain an Employer Identification Number (EIN). This number is issued by the IRS and will be the number you put on forms to show you paid employee taxes. It is easy to apply for and can be done at www.irs.gov.
- If you make an international hire, verify the applicable immigration documents and confirm that the individual is eligible to work in the United States (and for how long).
- Alternatively, consider hiring through an agency with responsibility for confirming immigration status, paying the employee, and paying applicable employment taxes.
For more information and guidance on hiring household employees, consult your Polsinelli employment lawyers. The 2016 IRS Household Employer’s Tax Guide is also excellent resource for information on this issue.
Have a great Summer!