If you hire individuals to perform household work in or around your private residence, such as housekeepers, maids, babysitters, gardeners, or similar roles, they are considered household employees if you control both the work performed and how it is done. In contrast, independent contractors (e.g., plumbers, repair workers, or contractors) are not classified as your employees.
Social Security and Medicare Taxes (FICA)
The Federal Insurance Contributions Act (FICA) tax covers both Social Security and Medicare taxes, with the employer and employee each responsible for 7.65% of wages (6.2% for Social Security and 1.45% for Medicare).
✅ For 2025, if you pay a household employee $2,800 or more in cash wages, you are generally required to:
Withhold 7.65% from the employee's wages (their share of FICA taxes) unless you choose to cover their portion from your own funds.
Pay your own matching share of FICA taxes, which is also 7.65%.
Cash wages include payments made by check, money order, or other monetary forms.
Key Considerations:
If you opt to pay your employee’s FICA share from your own funds, the amount you cover is treated as additional taxable wages for the employee’s income tax purposes, but it is not included as Social Security, Medicare, or FUTA wages.
You are not required to withhold or pay FICA taxes on wages paid to:
Your spouse
Your child under 21
Your parent (unless an exception applies)
An employee under 18 years old, unless household work is their primary occupation (students are generally exempt).
For further details on these exceptions, consult Publication 926.
Additional Medicare Tax
The Additional Medicare Tax of 0.9% applies to wages exceeding specific thresholds based on the taxpayer’s filing status.
Employers must withhold this tax on an employee’s wages exceeding $200,000 in a calendar year, regardless of the employee's filing status.
Withholding begins in the pay period when wages surpass $200,000 and continues for the rest of the year.
No employer match is required for this tax.
For more details, see the Instructions for Form 8959 and the IRS Additional Medicare Tax FAQs.
Federal Income Tax Withholding
You are not required to withhold federal income tax from a household employee’s wages.
However, if your employee requests withholding and you agree, they must complete Form W-4 (Employee's Withholding Certificate).
Use Publication 15-T to reference the applicable tax withholding tables, which are updated annually.
Form W-2 and Form W-3 Requirements
If you withhold and pay Social Security and Medicare taxes or withhold federal income tax, you must:
Complete Form W-2 (Wage and Tax Statement) for each household employee.
File Form W-3 (Transmittal of Wage and Tax Statements) along with the W-2 forms.
✅ To complete Form W-2, you will need:
An Employer Identification Number (EIN).
Your employee’s Social Security number.
If you do not have an EIN, you can:
Apply online using the IRS EIN application (available Monday through Friday, 7 a.m. to 10 p.m. Eastern Time).
Submit Form SS-4 by mail or fax.
International applicants can call 267-941-1099 (not toll-free) for EIN assistance.
Refer to Publication 926 for more details on filing requirements.
Federal Unemployment Tax (FUTA)
If you pay household employees cash wages totaling more than $1,000 in any calendar quarter during the current or previous year, you are generally required to:
Pay FUTA tax on the first $7,000 of cash wages paid to each household employee.
FUTA tax rate: 6% of the employee’s FUTA wages.
You may qualify for a credit of up to 5.4% for state unemployment taxes paid, lowering the effective FUTA tax rate to 0.6%.
❗ Exclusions from FUTA tax:
Wages paid to your spouse, child under 21, or parent are not subject to FUTA.
Only the first $7,000 of wages per employee is subject to FUTA tax.
Do not withhold FUTA tax from your employee’s wages—it must be paid entirely from your own funds.
If you paid wages subject to the unemployment compensation laws of a credit reduction state, your FUTA tax credit may be reduced. Check the Instructions for Schedule H (Form 1040) for guidance.
Schedule H (Form 1040) – Reporting Household Employment Taxes
You must file Schedule H (Form 1040) if you:
Pay wages subject to FICA or FUTA tax.
Withhold federal income tax from your employee’s wages.
✅ How to file:
Attach Schedule H to your Form 1040 (U.S. Individual Income Tax Return) or other applicable returns, including:
Form 1040-SR (for seniors)
Form 1040-NR (for nonresident aliens)
Form 1040-SS (for self-employed individuals, including those in Puerto Rico)
Form 1041 (for estates and trusts)
If you are not required to file a return, submit Schedule H by itself to report household employment taxes.
✅ Sole Proprietors:
If you file Form 940, 941, 944, or 943 for business employees, you can report household employee wages and taxes on those forms instead of Schedule H.
Estimated Tax Payments
To avoid a balance due when filing your tax return, consider making estimated tax payments during the year.
You can increase your federal income tax withholding through your employer to cover both your household employment taxes and your income tax.
Alternatively, you can make quarterly estimated tax payments using Form 1040-ES (Estimated Tax for Individuals).
❗ You may face an estimated tax underpayment penalty if you fail to pay enough tax during the year. Refer to Topic 306 for more information.
✅ Key Takeaways:
FICA taxes: Both employer and employee pay 7.65% of wages.
FUTA taxes: You pay 6% on the first $7,000 of each employee's wages (potentially reduced to 0.6% with state credits).
Federal income tax: Withholding is optional unless requested by the employee.
Form W-2 and W-3: Required if you withhold Social Security, Medicare, or federal income tax.
Schedule H: Used to report household employment taxes on your individual tax return.
Estimated tax payments: Recommended to avoid underpayment penalties.
For further details, consult Publication 926 and the IRS website.