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How much time does it take to file household employment taxes?

Here's how much work you can expect to do managing household employment taxes and payroll

How much time does it take to file household employment taxes?

You probably know that when you hire a nanny or senior caregiver, you need to pay taxes if that person will earn at least $2,600 in a calendar year. But what exactly does filing household employment taxes entail? How much work will it take if you do it yourself?

The IRS estimates a typical family will spend 50 to 55 hours a year managing the aspects of being a household employer. This includes putting your caregiver on payroll, filing taxes and adhering to labor laws. Here are five areas of household employment that will take up the vast majority of your time. If it seems like too much for you, HomePay can take care of this work on your behalf.

1. Researching federal, state and local laws to stay in compliance

Labor laws, payroll rules and tax requirements aren’t exactly light reading. But as a household employer, keeping up with those areas is essential. For instance, did your state just pass a Domestic Workers’ Bill of Rights that could impact the overtime laws in your area? Are you confused because your state requires different tax filing deadlines depending on how much in taxes you withhold from your nanny? Staying on top of current issues gives you the tools to stay in compliance with the law, but it requires some time and effort.

Read more about the specific requirements in your state.

2. Documenting your caregiver’s payroll details

Payday isn’t as easy as writing a check. With tax withholdings to determine, possible overtime hours to consider or even vacation time to finalize, payday can get complicated. As an employer, you have to make sure your nanny or caregiver’s paycheck is accurate, on time and documented correctly on each pay stub.

3. Filing tax returns

One of the toughest parts of being a household employer is keeping track of all the frequent tax filing deadlines. A meticulous calendar can help you track the state and federal deadlines, but you’re still responsible for filling out the correct tax form and remitting the correct tax amounts on time. Check out our nanny tax timeline and learn what to do when.

4. Dealing with the IRS and the state

If you’re researching a new or existing law and can’t find the answer, odds are your next step will be contacting the IRS or the state. Be prepared to go through phone trees and wait on hold as these agencies are bombarded with calls everyday from businesses and individuals looking for answers. You’ll also need to be prepared to respond to notices mailed to your home. Some are purely informational, while others may require you to make changes to how your household employer taxes are filed. Both of these scenarios require you to budget your time accordingly to make sure you don’t let anything slip through the cracks.

5. Resolving human resources issues

When you hired your caregiver, you went over all the details to make sure they were the right person to care for your family. You probably didn’t think the requirements concerning maternity leave, employment contracts, hiring and termination issues or paid time off would become your area of expertise. But, as a household employer, all those human resource issues fall squarely on your shoulders. Expect to spend a good chunk of time familiarizing yourself with these issues so you can make sure you’re following the best employment practices and complying with the law.

With all these tasks, it’s easy to understand how it will take 50 to 55 hours of your time. If you need someone to do it for you or just want to talk through some concerns, check out how HomePay can help.

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