Household Employee Question

Ernie Neve, CPA

October 23, 2019

Question: We have a nanny who watches our kids every day. She doesn’t live with us, so is she a household employee or an independent contractor? 

Answer: This is a good question. Obviously, if you hire a babysitter once a month, they’re an independent contractor who is responsible for paying their own taxes. But that’s not the situation we are talking about. And if you have someone that you regularly employ and pay more than $1,900 a year (or you pay all employees more than $1000 in a 3-month period)’ they count as a household employee.  

That means you have to file schedule H, which helps you figure out how much you owe on your household employees. It’s the same as any other employer-employee situation: There’s a 12.4% Social Security tax, a 2.9% Medicare tax, and a 6% federal unemployment tax. You owe all of the federal unemployment tax and half of the Social Security and Medicare taxes. 

There are many reasons your tax burden may be less, however. For example, if you pay state unemployment taxes, then your federal unemployment tax may be less. It’s hard to know what you qualify for without a good tax accountant on your side, and it’s worth finding out – you could save thousands in taxes. 

We at the Neve Group are experts at navigating the IRS maze. We will customize a resolution plan to fit your individual needs and help you permanently solve your IRS problems. Please contact Ernie Neve from the Neve Group at 610-278-8900 or visit 

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