Having help around the house can be an enormous benefit for families that are overwhelmed with work, parenting, and other obligations. Hiring a household employee, however, can affect your taxes, so it is important to know what you are getting yourself into.
What Is a “Household Employee”?
The IRS uses a two-part definition of “household employee”: the job must involve domestic services, and the person must be an employee rather than an independent contractor.
The term “domestic services” includes any work typically done in or around the home, including:
– House cleaning;
– Child care;
– Gardening or groundskeeping; and
– In-home nursing care.
One might be tempted to think of a large, exceedingly-wealthy household like the one depicted in the television show Downton Abbey. Many households in the U.S. employ one or two household employees, such as a housekeeper and a nanny.