Paying Taxes for Part-Time Caregivers
Do you need to deal with taxes for your part-time nanny, babysitter or other type of caregiver?
You know you have to pay taxes for your full-time nanny, but what about that after-school sitter who watches your daughter for two hours after school? Or the housekeeper who cleans your house once a week? Or that girl up the block who entertains your kids while you and your partner head out on your weekly date night?
If you hire a part-time caregiver who doesn't work through an agency or through her own company, and if you give specific instructions on what work you want done and how, that person is considered a household employee, not an independent contractor, says Lisa Weinberger, a lawyer and founder of Mom, Esq.
And if you pay that person more than $1,900 in a calendar year, you’re her household employer and are responsible for paying taxes.
Learn about why nanny taxes aren't just for nannies >>
Taxes can be confusing, so here are a few answers to common questions that people have about paying taxes for part-time help.
What If She Only Works a Few Hours Each Week?
Believe it or not, it doesn't really matter how many hours your caregiver spends working for you -- it's about the money, not the time. The IRS takes notice if she goes over a certain financial threshold and performs her job according to specific definitions. If you pay your caregiver $1,900 or more in any calendar year, you have household employer tax responsibilities. That means withholding taxes from your caregiver's pay and paying your share of employer taxes.
What Types of Caregivers Qualify?
Pretty much anyone who you pay more than $1,900. For example, your summer nanny may only work for you 10 weeks out of the year, but she's likely to pass that threshold for paying taxes. If you go out on the town every Friday, your date night babysitter may also qualify.
What if You Share a Dog Walker?
If you hire someone to walk your dog every day while you're at work and your neighbor also pays for the same service, you will have to pay taxes for the dog walker if that $1,900 threshold is met. If, however, you have three different people who do it and you don't pay any of them $1,900 or more in a given calendar year, you're not responsible for paying employer taxes for any of them. (The same holds for other types of caregivers like babysitters.)
What If You Hire Your Summer Nanny for Full-Time Work?
"Lots of families get into trouble when their caregiving situation changes from part-time to full-time," says Stephanie Breedlove, vice president of Care.com HomePay. "You really need to keep track of the earnings of anyone you employ, so that you don't cross the $1,900 tax withholding threshold without realizing it."
You don't want to discover in December that your housecleaner has already earned $3,000 for the year. You'll have to scramble to establish federal and state IDs and file back tax returns with the state -- all before your January deadlines.
Do I Have to Pay Taxes for My Housekeeper?
If you hire someone to deep clean your home once a year before the holidays and pay her less than $1,900, then you aren't responsible for withholding her employee taxes and paying matching employer taxes. If, however, you hire her to do that same job a few times a year, you need to check her earnings to see if her payments land her above the threshold.
Learn about the 8 Additional Services Housekeepers Can Perform »
What if I Pay My 16-Year-Old to Watch Her Brother After School?
If you pay your spouse, your child under the age of 21 or a parent more than $1,900 in a calendar year, you don't need to pay household employment taxes for them. But they'll still need to claim that money on a personal income tax form.
Now that you know you have to pay taxes for your part-time caregiver, where do you start? Check out our tax articles for some helpful advice.
Julia Quinn-Szcesuil is an award-winning freelance writer and a mom to two girls. She lives in Massachusetts and has written for local and national publications.
Your Next Steps:
- Learn what you should be paying your sitter
- Set up a payroll account
- Read about child care tax breaks
* The information contained in this article should not be used for any actual caregiver relationship without the advice and guidance of a professional advisor who is familiar with all the relevant facts. The information contained herein is general in nature and is not intended as legal, tax or investment advice. Furthermore, the information contained herein may not be applicable to or suitable for your specific circumstances and may require consideration of other matters.
For more tips and advice, check out these Nanny Tax Articles.