Defining a Household Employee

• A household employee is someone who is hired to do household work and meets the Internal Revenue Service definition of "employee." An employee is someone whose work is controlled by an employer. This means that not only does the employer define what job is to be done, but also specifies how the job is to be accomplished. If a worker can control how the work is done, he is considered self-employed and not an employee of the employer. Per IRS regulations, characteristics of the self-employed include the worker providing their own tools, hiring workers to complete the tasks in question and offering the same services that he may provide you to the general public at large. Full-time and part-time workers can be employees, and how the employee's pay is determined is also not a factor.
  
  

Defining SSI

• Per the Social Security Administration, SSI is a benefit provided to help the elderly, blind and disabled that have little to no income. The program is meant to help these individuals obtain food, clothing and shelter. While administered by the Social Security Administration, SSI is not funded by the Social Security taxes that are associated with employment, but with general federal tax revenues.
  
  

When to Pay Employment Taxes

• If you employ a household employee, you may need to pay the associated federal employment taxes. The Social Security taxes pays for benefits for the elderly, survivors, and disabled, while Medicare taxes pay for medical benefits for workers. Per IRS regulations, you need to pay 7.65 percent of the employee's wages for these programs. In addition, you will need to withhold from your employee her share of these taxes, as you are responsible for paying that amount as well. Per IRS regulations, an employee needs to pay 4.2 percent for social security and 1.4 percent for Medicare. If you pay your employee more than $1,700 in cash during 2011, you are responsible for paying employment taxes. If you pay less than $1,700 in cash you are not required to pay employment taxes, even if you provide noncash benefits to your employees, such as food, clothing and shelter.
  
  

Tax Tips and Disclaimer

• For complex returns consult with a tax professional, such as a certified public accountant or attorney, as she can best address your individual needs. Keep your tax records for at least seven years to protect against the possibility of future audits. Every effort has been made to ensure this article's accuracy, but it is not intended to be legal advice.