Legal Definition of Household Employer

A household employer is defined as anyone who pays an individual to perform duties in or around their home. Household employees include nannies, nurses, tutors, housekeepers, gardeners, cooks, personal assistants, household managers, etc. If you pay that person $1,600 (2008) or more in a calendar year, you will be required to fulfill state and federal tax obligations (sometimes referred to as "nanny taxes").

The good news: tax breaks can offset – sometimes even exceed – your nanny tax costs. That means you can actually come out ahead by paying legally! Call us and we can calculate your household employer taxes – as well as help you maximize your tax breaks.

Misclassifying Employees As Independent Contractors

You may hear the term “independent contractor” thrown around – some household employers try to claim that their worker is an independent contractor rather than an employee to avoid paying household employment taxes. Please be warned that the government has ruled on this argument and, with very, very few exceptions, classifying a household worker as an independent contractor is against the law. It is considered tax evasion and exposes those families to back taxes, penalties and interest as well as considerable legal risk. If you would like to discuss your specific case, please call us – or you can petition the IRS for a formal ruling using Form SS-8. A formal ruling will take approximately 180 days; since it is almost certain that your worker will be considered an employee, we recommend that, while waiting for a ruling, you limit your liability by taking the conservative approach and classifying your worker as a household employee.

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