Household Employment "Nanny" Taxes
In certain circumstances domestic workers are not your employees. Workers of companies which you contract for services are not your employees. Also, workers that you hire directly are sometimes independent contractors and are not your employees. Independent contractors usually hold themselves out as being in business, have multiple customers, provide their own tools, and the like.
Caution--It is dangerous to automatically assume a domestic worker is an independent contractor. If you are wrong, there can be serious sanctions levied by the IRS and state government. When in doubt, solicit input from an informed professional such as a tax attorney or accountant.
A taxpayer's spouse is never considered a household employee and children under 21 and parents of taxpayers usually are not considered household employees.
| Tax Item | Wage Thresholds | Employer Tax Liability | Worker Tax Liability | Frequency Remitted |
| Social Security | More than $1,900 to any worker in a calendar year | The employer and worker each must pay 6.2% of the 1st $142,800 in wages for a total of 12.4% | Quarterly on IRS Form 1040-ES. Both employer and worker portions must be remitted. | |
| Medicare | The employer and worker each must pay 1.45% of all wages earned for a total of 2.9% | |||
| Federal Unemployment | More than $1,050 in any calendar quarter obligates payment for that employee for both the current and following years. | 0.6% of the 1st $7,000 in wages earned | Workers are not permitted to pay unemployment and workers compensation taxes. These taxes must be paid by the employer. | |
| State Unemployment | Approximately 2.7% of the 1st $9,000 in wages earned | Quarterly on Ohio Form JFS-66111 | ||
| Workers Compensation | More than $160 paid to any worker in a calendar quarter | Approximately 1% - 2% of all wages earned | Bi-monthly | |
- Employer must have an Employer Identification Number ("EIN"). IRS Form SS-4 is used to apply for an EIN.
- Employer must verify that the household worker is eligible to work in the United States by completing INS Form I-9.
- Employer must report each new hire to the State of Ohio within 20 days of hire by completing ODHS Form 7048, State of Ohio New Hire Reporting.
- Employer must annually file Schedule H-Household Employment Taxes with the employer's personal income tax return.
- Employer must annually report wages to the Social Security Administration by completing IRS Forms W-2 and W-3.
- Employer must open an unemployment account by completing Ohio Job & Family Services Form JFS 20100.
- Employer must open a workers compensation account by completing an application for workers compensation coverage.