Yes. Remember that as an employer of a household employee you are obligated to pay multiple federal taxes (and possibly state taxes as well). Different taxes are triggered by different amounts and have different exceptions, so it’s important to understand each:
- Medicare and Social Security Taxes: If you pay wages of $1,700 or more in 2011 you must withhold medicare and social security taxes. There are four people that are exceptions–that is, you may not have to pay taxes if you are paying one of the following individuals–(1) a spouse; (2) your child who is under the age of 21; (3) your parent; or, (4) an employee who is under the age of 18 anytime during 2011.
- Federal Unemployment Tax: If you pay total cash wages of $1,000 or more during any calendar quarter during 2010 or 2011 you must pay federal unemployment tax. Similar to Medicare and Social Security Taxes discussed above, there are certain individuals who may not count under this rule: if you are paying (1) your spouse; (3) your child who is under the age of 21; or, (3) your parent.
- Federal Income Tax: If you choose to withhold federal income tax, the IRS Household Employer’s Guide sends you to Publication 15 which includes tables and explanations on how much you should withhold in any given situation.
Remember, the information above only pertains to your federal tax obligations. You may be obligated to pay state taxes, and those taxes may be triggered by different amounts. Please consult with your state’s revenue website for information.