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The Complete Payroll Blog

Is your at-home helper actually your employee?

Posted by Complete Payroll | Jul 19, 2017 3:59:13 PM

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If you decide to hire a domestic or household employee - exaples would include a nanny, care taker, a driver or someone to tend of your garden - you must be aware that the second you enter a contract with the person you are hiring, you undertake special responsibility, including payroll and tax-related issues, especially if the person you hire becomes your employee (and not just an independent contractor.).  

Is this person your employee or an independent contractor?

Your household help is technically your employee if you have control not only over the tasks that your help is charged with, but also over the manner the tasks are carried out.

So if you hire someone to carry out certain tasks around the house, but that person is self-employed and works with his or her own tools and carries out the task as part of the general services he or she offers to the public, this person is an indepdendent contractor (like a plumber or an electrician you hire for a specific job) and not your employee.

But if that person uses YOUR tools and carries out YOUR specific instructions, that person qualifies as your employee.

What happens if they're technically your employee?

If your relationship with the domestic help complies with the definition of employer-employee relationship - which we explain in much more detail here - there are payroll and tax issues you must address...

  • You must make sure the person you are hiring can legally work in the United States. This means completing an I-9 Form for Employment Eligibility Verification with them.
  • You must find out if you are required to pay state taxes, which are different for each state.
  • You must report the employment within 20 days of the hiring and register as an employer and obtain an employer identification number (EIN).
  • You must withhold Medicare taxes, Social Security taxes and federal income taxes.
  • Most states require you as an employer to pay worker’s compensation and disability insurance as well.
  • You must pay unemployment insurance and report employee wage information on a quarterly basis.
  • You'll also need to set up payroll for them.

If you're in a position where you need to formally "hire and onboard" a new hire in New York State (or anywhere, for that matter), our Employee Onboarding Kit would be a helpful tool for you.

Also... Check out the IRS's tax rules for household and domestic employees here.

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If you're hiring an employee, or think you might be soon, check out our comprehensive resource page, Employee Onboarding - A Complete Guide. This is a handy, tightly-packaged outline that presents all the critical hiring and onboarding elements in simple, chronological order. 

Topics: Taxes, Employees, Payroll

Written by Complete Payroll

We do payroll, HR, timekeeping and more for employers all over the country from a small, rural town in Upstate New York. And we're constantly publishing articles and other resources to help business owners, HR managers or anyone that helps manage a workforce. Welcome to Payroll Country!

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