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Top Tips: Pay Issues for Nurses and Nannies Working in Your Home

As President Clinton’s would-be Attorney General learned to her embarrassment in the 1990s, even a single domestic working in a residence can trigger reporting and withholding duties on the part of a household employer.  These duties fall into several categories:

  • A domestic worker receiving more than $1,800.00 in a calendar year must have the employee’s share of FICA taxes withheld from his or her pay, unless the employer has agreed to pay both the employer’s and the employee’s share. 
  • On the other hand, the employer generally need not undertake state or federal income tax withholding unless both the employer and the employee agree to the withholding.
  • Employers paying $1,000.00 or more for domestic service in any calendar quarter must submit a quarterly wage report to the state unemployment authority and pay the taxes reflected in the report.
  • The employer must issue a W-2 to each employee by January 31 of the next year, reflecting the amounts paid to and withheld from for the employee.
  • The employer must attach Schedule H to his or her federal income tax return, reflecting the amounts paid to and withheld from all employees, and the FICA taxes and federal unemployment taxes due for the previous year.
  • Employers above a legal threshold must furnish workers’ compensation insurance coverage for their employees.  In Missouri, the current threshold is having five or more employees.  In Kansas, an annual payroll of more than $20,000 triggers this requirement. Household employers in Colorado, on the other hand, are exempted from the workers’ compensation requirement, so long as they have no other employees who are subject to workers’ compensation coverage, and so long as their household workers are not regularly employed for 40 hours or more per week, or for five days or more per week.

Of course, we’d be happy to discuss how these and other requirements will apply to you.