Families in the nation’s capital have a specific set of tax and labor laws to follow when they hire a household employee. That’s why we’ve created this Washington, D.C. nanny tax overview to help answer all the questions you may have. Check out the information below that HomePay is here to help with.
Checklist for Washington, D.C. household employers
We know you’re busy! Here’s a quick “to-do” list with links to extra details below.
Beginning of employment
- Verify caregiver’s work eligibility.
- Set up EIN & state tax account(s).
- Obtain a required workers’ compensation insurance policy.
- Provide a wage notice.
- Display employment posters.
During employment
- File returns, remit taxes and manage correspondence.
- Pay at least Washington, D.C. minimum wage.
- Pay overtime, when it applies.
- Pay mileage reimbursement, when it applies.
- Provide paid sick time and paid family leave.
Optional benefits for your employee
Ending employment
- Manage unused paid time off.
- Close down your state employment tax account(s).
- Maintain payroll records.
Beginning of employment
Verify caregiver’s work eligibility
Before your employee begins to work, you need to fill out Form I-9 to verify they’re eligible to work in the U.S. The I-9 does not get sent to any government agency but must be presented to authorities if your nanny or senior caregiver’s employment eligibility is ever questioned.
Set up EIN & state tax account(s)
You must first apply for a EIN (Employee Identification Number) with the IRS. This will be used as your unique ID with both state and federal tax authorities. Then you can open an account with your state taxing authority.
Workers’ compensation
Household employers in Washington, D.C. are required to get coverage for workers’ compensation insurance if their employee works at least 240 hours per quarter. These policies pay for medical expenses and lost wages if an employee has a work-related injury or illness. You can obtain an instant quote and purchase a policy online, or contact our partner, Clarke White, at 804-267-1210 or wcnanny@allrisks.com.
Wage notice
Household employers in Washington, D.C. are required to provide their employees with a written wage notice at the time of hire and if there are any changes to the employee’s wages or the employer’s information.
Employment posters
Families in Washington, D.C. are required to notify their employee of their rights by sharing these posters.
During employment
File returns, remit taxes and manage correspondence
- File state employment tax returns throughout the year and remit state employer and employee taxes.
- Remit federal employer and employee taxes via 1040-ES estimated tax payment voucher four times each year.
- Each year end, prepare Schedule H and file with Form 1040; prepare and distribute Form W-2 to each employee; file Form W-2 Copy A/Form W-3 with the Social Security Administration (SSA).
- Manage ongoing alerts and notices from the state (tax rates and labor law is subject to change at any time).
Minimum wage rate
The current minimum wage in Washington, D.C. is $17.00/hour.
Washington, D.C. overtime requirements
- Live-out employees must be paid 1.5x their hourly rate for all hours worked over 40 in a workweek.
- Live-in employees are not required to be paid overtime.
- Overtime is not required to be paid when work is performed on a holiday.
Mileage reimbursement
Washington, D.C. employers must reimburse employees if they are required to drive their own vehicle on the job. The current federal mileage reimbursement rate is 67 cents per mile and miles driven commuting are not eligible for reimbursement.
Paid leave
Paid sick time
Household employers in Washington, D.C. are required to provide up to 24 hours of paid sick time each year to their employees. HomePay will track sick time accruals on your account.
Paid family leave
Washington, D.C. household employers are required to allow their employees to take 2-8 weeks of paid family leave. Paid family leave benefits are funded through a small tax paid by employers on a quarterly basis.
Optional benefits for your employee
Health insurance
Families with only 1 employee can make contributions toward their employee’s health insurance premiums and treat the amount as non-taxable compensation. In this scenario, neither the employee nor the employer are required to pay any taxes on that portion of the compensation.
Families with 2 or more employees have 3 options:
- Set up an Individual Coverage Health Reimbursement Arrangement (ICHRA).
- Set up a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA).
- Purchase a policy through SHOP (Small Business Health Options Program).
Visit our health insurance page for more information about these options.
Ending employment
Managing unused PTO
Washington, D.C. household employers do not need to pay their employees for unused sick time. However, unused vacation time must be paid out unless their employment contract states otherwise.
Close down your state employment tax account(s)
The state tax agencies expect you to file timely returns for as long as your tax accounts are open — even to report $0 in wages paid.
Maintain payroll records
Household employers are required to keep wage records on file for at least three years.
The information contained in this article is general in nature, may not be applicable to your specific circumstances, and is not intended to be a substitute for or relied upon as personalized tax or legal advice.