2023 Washington D.C. household employment tax and labor law guide - Care.com HomePay

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2023 Washington D.C. household employment tax and labor law guide

Household employment requirements for families hiring a caregiver in the District of Columbia

2023 Washington D.C. household employment tax and labor law guide

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 

During employment 

Optional benefits for your employee

Ending employment

Beginning of employment 

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 $16.10/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 65.5 cents per mile and miles driven commuting are not eligible for reimbursement.

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:

  1. Set up an Individual Coverage Health Reimbursement Arrangement (ICHRA).
  2. Set up a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA).
  3. 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.

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