Household employee payroll is not in itself especially complicated. At least not compared to other types of payroll processing. If you pay wages of $2,000 or more to any one household employee, then you are required to withhold 7.65% of the employee pay for FICA taxes, while also paying another 7.65% of the wages for the employer portion of these payroll taxes. You’ll have to complete both a W-2 and W-3 form.
The good news—if you can count it as good news—is that, typically, household employee payroll avoids other types of paycheck deductions/additions. If you’re an exception to the rule, know that AMS Payroll can handle these types of payroll adjustments with up to 40 different user defined fields. This is in addition to automatic calculations for any federal, state, and local payroll taxes that may be applied.
Who is a Household Employee?
This question exists within the larger gray area of “who is an employee and who is an independent contractor.” But the IRS also gives special guidelines and allowances for household workers within their Topic 756 household employment instructions:
“Household employees include housekeepers, maids, babysitters, gardeners, and others who work in or around your private residence as your employee. Repairmen, plumbers, contractors, and other business people who provide their services as independent contractors, are not your employees. Household workers are your employees if you can control not only the work they do but also how they do it.”
Most independent contractor services require a 1099-MISC filing at just $600. The $2,000 threshold as well as who controls the nature of work allows many households to hire commercially available cleaning and babysitting services without filing directly with the IRS for household employee payroll.
End-of-Year Household Employee Payroll Forms
Along with tracking employee income withholding and employer tax payments, you need to settle up with the IRS at the end of the year. Many individuals employ a household worker or two but no traditional business employees. The IRS created a filing form specifically to deal with this type of case and simplify the process for quarterly and annual employment filing forms.
Check out this online portal to find more detailed information about Schedule H Form 1040, including both the form template and the form instructions. If, on the other hand, you own a business that already has employees, you can more than likely use your existing unemployment form filings—whether you use Form 940, 941, 943, or 944.
Multiple Software Options from AMS
Advanced Micro Solutions (AMS) also provides versatile filing solutions. Looking for basic software support for your household employee filing forms? You’ll want to buy our W-2/1099 Forms Filer and Forms Filer Plus module. Looking instead for a more comprehensive payroll solution? Try AMS Payroll. Check out our catalogue of products and if you want to see our system in action, download our demo software.
- W-2/1099 Forms Filer (required platform)
- Forms Filer Plus
- AMS Payroll
- Software-Generated Forms
- E-File Direct
- Affordable Care Act Filer
- 1042-S Filer
If you still have questions, send us an email or talk to our Sales and Information team at (800) 536-1099.