Household employees and unemployment tax, what is that?

[Anonymous]

How do I avoid getting into trouble with this. Can some one guide me to a web site that explains what requirements are out ther? It is confusing.

[Anonymous]

A little late to be seeking help, isn't it, Ms. Killefer?

[jsteele]

Look for Kathy Webb's banner advertisements that run frequently at the top of the page. Or, go to her website at www.4nannytaxes.com

[Anonymous]

what about tax requirements for cleaning people? I assume most of us (who use cleaning people) just write a check for them. are we supposed to be paying their taxes? what are the requirements of that one?

[Anonymous]

Unemployment taxes are a state tax issue and, at least in Maryland, are filed quarterly. I think you also pay them on the federal return on an annual basis. The form is simple to find/fill out. You can do it electronically. They are due one month after the end of a quarter. I pay it for our weekly housecleaner. It only amounts to a few dollars a quarter, literally under $10.

[Anonymous]

Anonymous wrote:what about tax requirements for cleaning people? I assume most of us (who use cleaning people) just write a check for them. are we supposed to be paying their taxes? what are the requirements of that one?

Yes, you are supposed to be paying state (or DC) and federal unemployment tax.

[Anonymous]

Only if they are household employees (as opposed to a service). Nannies are always household employees, but cleaning people may or may not be.

[Anonymous]

There's a limit that's different for each state as to whether you pay unemployment tax. In MD, you pay it if you give the person (not service) more than $1000 a quarter. Nancy Killefer had two nannies and a personal assistant. She definitely had to pay unemployement taxes.

[Anonymous]

Anonymous wrote:There's a limit that's different for each state as to whether you pay unemployment tax. In MD, you pay it if you give the person (not service) more than $1000 a quarter. Nancy Killefer had two nannies and a personal assistant. She definitely had to pay unemployement taxes.

True, but given the small amount of the tax liability (~300 plus penalties?) I suspect there was a bookkeeping error involved here - there would have been many more $$ at issue if she was just skipping the tax.

[Anonymous]

Anonymous wrote:what about tax requirements for cleaning people? I assume most of us (who use cleaning people) just write a check for them. are we supposed to be paying their taxes? what are the requirements of that one?

http://www.4nannytaxes.com/faq/PayrollTaxesCleaningLady.cfm

It's probably even more important if you give them a check, because you create an audit trail.

[Anonymous]

Anonymous wrote:Only if they are household employees (as opposed to a service). Nannies are always household employees, but cleaning people may or may not be.

What about babysitters? We have someone that works 2 to 3 hours a day in the evening - are they an employee?

[Anonymous]

Woa, if my cleaning lady shows up once every few weeks, I never know when she'll be there, do I have to pay?
What is the difference between the person who cleans your yard and the one who cuts the grass?

[Anonymous]

If you reach the pay limit provided by state law (which is not high) you are obligated to pay unemployment taxes for them to the state or DC. We pay it for both our weekly housekeeper and our part-time nanny. For the PP, a regular part time babysitter may also qualify if you pay her enough during the course of the year. As PPs have said, it amounts to only a tiny amount of money for a part time relationship and is more just a paperwork pain in the butt. I will also tell you that I am sure that most people do not pay this tax on most part time people who would qualify. When these types of "scandals" hit, I always wonder how many of the people who are "outraged" actually would have some sorts of tax issues or other problems if someone went through their life in such great detail. Most of us who are human have overlooked a piece of paperwork we were supposed to pay attention to, or made a mistake on our tax forms that the IRS follows up on, or didn't pay attention to whether a babysitter was being paid enough to require unemployment or social security payments.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Only if they are household employees (as opposed to a service). Nannies are always household employees, but cleaning people may or may not be.

What about babysitters? We have someone that works 2 to 3 hours a day in the evening - are they an employee?

I called DC DOES to ask about this a while back. The answer I received (which I did not verify from a written source) was that as long as your annual payroll is over a certain threshold (it was low, maybe even $500), you are supposed to pay unemployment tax on all employees. An adult babysitter is definitely an employee. I pay unemployment tax on all regular and semi-regular babysitters, but I have to admit I have let it slide for people who have filled in for our regular babysitters once or twice.

Some of the confusion may be due to the fact that the the obligation to pay unemployment tax and the obligation to pay payroll tax are triggered at different thresholds. The FICA threshold is per employee per year; the unemployment tax threshold, at least in DC, is per payroll per year, and it is lower than the FICA threshold.

[Anonymous]

My understanding for cleaning people is that it is dependent on whether they are self-employed contractors or if they are your employees. If she brings her own vacuum and cleaning supplies, she is self-employed and you don't pay her taxes or unemployment. However, if she uses your supplies, she is your household employee.