Household Employees Tax

If you have employed someone in your home that does not work for an agency in an employee relationship and you pay them cash wages of $1,500 or more you may be required to withhold and remit to the IRS Social Security tax and Medicare tax, known as FICA, and you are required to pay an equal amount of tax from your own funds. You may also have to pay Federal Unemployment tax to the IRS, known as FUTA, and also make an advance payment of the earned income tax credit if the employee qualifies and asks for it.

Employees and employers each pay one-half of the tax for social security tax which is at a rate of 6.20% and whose maximum is $5,840.00. Self employed persons are entitled to deduct one-half of their self employment tax on Line 27 of Form 1040. FICA tax does not hold good for household employee wages paid to the person’s spouse or child under the age of 21, or the parents of the person. The FUTA tax rate for employer is 6.2% while the maximum amount of tax is $434.00.