What qualifies as a Household Employee for IRS tax purposes?

Thanks for explaining! Just to clarify - if my cleaner ends up working some extra days and goes over the $2,800 threshold, what exactly would I need to do? Do I suddenly need to withhold taxes from her pay or can I just pay the employer portion? Also, does it matter if I pay her through Venmo vs cash?

If your cleaner exceeds the $2,800 threshold, you'd become responsible for Social Security and Medicare taxes (FICA) - which is that 7.65% you mentioned. You have two options: either withhold the employee's 7.65% share from their paychecks and pay your matching 7.65% employer portion, or you can choose to pay both portions yourself (15.3% total). Payment method doesn't change the tax obligations - whether cash, check, Venmo, etc. What matters is the amount and nature of the work. If you go over the threshold, you'd need to file Schedule H with your tax return and get an employer identification number (EIN). You might also have state-level requirements depending on where you live.

Did it help with understanding state requirements too? I'm in California and heard there are additional forms beyond the federal stuff. Also wondering if it helps with the actual payroll calculations throughout the year or just the year-end tax forms?

I'm skeptical about these tax tools. How is this different from just using TurboTax or something? I've been paying our housekeeper for years and never bothered with any of this because she says she files her own taxes.

Yes, it definitely covers state requirements! That was actually one of the most helpful parts for me since my state has some specific rules about household workers. It showed me exactly which California forms I needed in addition to the federal ones. For the payroll calculations, it guides you through setting up a proper payroll system with the right withholding amounts throughout the year. It's more comprehensive than just handling the year-end forms, which is what really helped me stay compliant all year.

Wait, how does this even work? I've literally spent HOURS on hold with the IRS before giving up. What's the catch - do they charge a fortune for this?

This sounds like a complete scam. There's no way anyone can magically get through to the IRS faster than normal people. They probably just connect you to some fake "agent" who gives you wrong information.

It works by using technology that navigates the IRS phone system and waits on hold in your place. When an actual IRS agent picks up, their system calls you and connects you directly to that agent. It's the same IRS agents everyone else talks to, you just don't have to be the one sitting on hold for hours. I was skeptical too until I tried it. The agent I spoke with gave me her IRS ID number and everything, so I know she was legitimate. And she answered my specific tax questions about household employee rules that only a real IRS employee would know.

That's really helpful advice, thanks! Do I need to do anything with the W-9 form after they fill it out? Like do I submit it somewhere or just keep it for my records?

You just keep the W-9 for your records - you don't submit it anywhere. It's protection for you in case you get audited and the IRS questions your worker classification decisions. If your worker ends up being classified as an independent contractor AND you pay them $600 or more in a year, you'll need to issue them a 1099-NEC form using the information from the W-9. But for household employees, you'd use the information for your Schedule H instead.

You're fine! The IRS specifically exempts babysitters under 18 from being considered household employees for tax purposes (as long as childcare isn't their principal occupation). So you don't need to worry about any of these rules for your teenage neighbor, regardless of how much you pay her throughout the year.

That's a really good point about documenting the working relationship! I'm definitely going to make sure I have that stuff written down. Quick question though - if my cleaner brings her own supplies but I'm still telling her which rooms to focus on each visit, does that lean more toward independent contractor or employee status? I'm trying to figure out which factors carry more weight in the IRS determination. Also curious about your experience going from monthly to weekly - did you have to go back and recalculate everything from earlier in the year when you crossed the threshold, or does it only apply going forward?

Good question about which factors carry more weight! The IRS uses a "totality of circumstances" test, but control over the work is usually the biggest factor. Bringing her own supplies definitely helps with independent contractor status, but if you're directing which rooms and what specific tasks each visit, that could still tip it toward employee. The key is whether you're controlling what work gets done vs how the work gets done. When I crossed the threshold mid-year, I had to go back and calculate from the beginning of the year - the $2,800 threshold is cumulative for the entire tax year, not just going forward. So if you hit $2,800 in September, you owe taxes on all wages paid from January onwards. I had to file amended quarterly forms and pay some penalties for late payments. Definitely learned to plan ahead after that!

This is such an important point that I wish more people knew about! I got hit with state unemployment tax requirements last year even though I was well under the federal threshold. My state had a $1,500 limit and I was paying my regular babysitter about $200/month, so I thought I was safe at $2,400 for the year. Turned out I still owed state unemployment taxes and had to register as an employer with the state. The paperwork wasn't too bad once I figured it out, but the penalties for filing late were annoying. Each state really does have its own rules - some even require workers' compensation insurance for household employees. Definitely worth a quick call to your state's employment department before you start paying anyone regularly, even if you think you're under all the thresholds.

Great questions! For checking state requirements quickly, I'd recommend starting with your state's Department of Labor website - most have dedicated sections for household employers that break down all the thresholds and requirements in one place. The IRS Publication 926 also has a helpful state-by-state chart, though it's not always the most up-to-date. Regarding your dog walker question - if they're truly an independent contractor, the state household employee thresholds typically don't apply. Those rules are specifically for employees, not contractors. But here's the tricky part: states can have different criteria than the IRS for determining worker classification, so someone might be considered a contractor federally but an employee at the state level. Your dog walker situation sounds like a clear independent contractor case (own supplies, other clients, sets methods), but I'd still recommend getting that W-9 form like others mentioned and documenting the working relationship. Better to have the paperwork ready if anyone ever questions the classification!

Your gardener situation is a perfect example of how tricky worker classification can be! The fact that he brings his own tools and has other clients definitely points toward independent contractor status. However, you're right that directing which specific areas to work on could be seen as controlling the work. Here's how I'd think about it: Are you telling him "focus on the rose bushes and trim the hedges" (directing what work) or are you telling him "use these specific pruning techniques and start at exactly 9 AM" (controlling how and when)? Gardening often involves some client direction about priorities and preferences, which is different from micromanaging the methods. Since you're just over the threshold at $2,880, I'd definitely recommend documenting the relationship clearly - does he quote you prices, invoice you, carry his own insurance? These business-like behaviors support contractor status. And yes, absolutely get that W-9! Even if you end up treating him as an employee, you'll have the tax ID info you need for your Schedule H. One other thing to consider - could you structure the payments to stay under the federal threshold? Maybe $119 per visit instead of $120? That would put you at $2,856 annually and avoid the whole issue, though you'd still need to check your state requirements as others mentioned.

This is incredibly helpful information! I had no idea about the 1099-NEC requirement for independent contractors over $600. That definitely applies to my situation since I'm paying $2,280/year. The Form SS-8 option is really interesting too - I've been going back and forth on whether my cleaner is an employee or contractor, and it sounds like getting an official IRS determination might be worth the wait to have that peace of mind. Do you know if there are any downsides to filing SS-8, like does it increase audit risk or anything? Also curious about the 20-factor test you mentioned - is that something readily available online or do I need to request it from the IRS? It would be great to have a more structured way to evaluate the relationship instead of just guessing based on a few factors. Thanks for bringing the professional perspective to this discussion - it's exactly what we needed to tie all these pieces together!

Filing Form SS-8 doesn't increase audit risk - it's actually a protective measure! If you follow the IRS's official determination, you're generally protected from penalties even if they later change their position. The main downside is just the time factor (usually 6+ months for a response) and you have to stop guessing in the meantime. You can find Revenue Ruling 87-41 with the 20-factor test on the IRS website - just search for "Rev. Rul. 87-41" in their publications section. It's also referenced in IRS Publication 15-A if you want the more readable version. The factors include things like training requirements, integration into business operations, order of performance, and financial aspects of the relationship. For your $2,280 cleaning situation, you're definitely in 1099-NEC territory if she's a contractor. Just make sure to get that W-9 before year-end so you have her tax ID for the 1099. And remember the January 31st deadline for both giving her the form and filing with the IRS!

Great question about the administrative burden! I've been managing household employee payroll for about two years now, and honestly, it's not as overwhelming as it initially seemed. The key is getting organized from the start. For time commitment, I probably spend about 30 minutes per month on payroll tasks - calculating withholdings, keeping records, and filing quarterly forms. The annual Schedule H adds maybe another hour or two during tax season. It's definitely more work than just handing over cash, but very manageable once you have a system. Regarding payroll services for household employers, I looked into a few but ended up doing it myself to save money. The services typically charge $30-50 per month, which seemed steep for my relatively simple situation (one part-time employee). However, if you have multiple workers or live in a state with complex requirements, the service might be worth it for peace of mind. The biggest upfront effort is getting your EIN, setting up state registrations, and creating a record-keeping system. After that, it becomes pretty routine. I use a simple spreadsheet to track wages and withholdings, and set quarterly reminders for tax filings. Much less intimidating than I initially thought it would be!