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Paying a domestic helper

Paying a domestic helper

Old Apr 17th 2013, 7:24 pm
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Default Paying a domestic helper

We want to use the services of a childminder/home help and the candidate has broached the idea of her being self employed - I pay her without withholding anything and she sorts out the taxes, medicare, California stuff, etc etc. Is this allowed? All I can find is http://www.irs.gov/publications/p926/ar02.html which tells me what I need to do if I sort out the taxes, but not whether she can do it herself.

Thanks.
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Old Apr 17th 2013, 7:49 pm
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Default Re: Paying a domestic helper

Just make sure she's a 'legal', employment-authorized worker.

Regards, JEff
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Old Apr 17th 2013, 7:50 pm
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Default Re: Paying a domestic helper

And make sure you have big insurance coverage....in case he or she falls in your home.


Jim.
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Old Apr 17th 2013, 7:53 pm
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Default Re: Paying a domestic helper

Originally Posted by jeffreyhy View Post
Just make sure she's a 'legal', employment-authorized worker.

Regards, JEff
My first thoughts too.
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Old Apr 17th 2013, 7:54 pm
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Default Re: Paying a domestic helper

Thanks. Is that a "yes" then, ie she can sort out her own taxes etc?
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Old Apr 17th 2013, 9:11 pm
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Default Re: Paying a domestic helper

Originally Posted by GeoffM View Post
Thanks. Is that a "yes" then, ie she can sort out her own taxes etc?
Probably.... you wouldn't withhold taxes for a plumber.... but you might want to find out if you have an obligation to report what you paid her, albeit gross. Also, If I remember correctly, if you have a business you have to start withholding taxes when you have more than four employees.

Last edited by Pulaski; Apr 17th 2013 at 9:15 pm.
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Old Apr 17th 2013, 9:23 pm
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Default Re: Paying a domestic helper

Originally Posted by Pulaski View Post
Probably.... you wouldn't withhold taxes for a plumber.... but you might want to find out if you have an obligation to report what you paid her, albeit gross.
Right... if the contract refers to being a subbie rather than an employee I guess.

Originally Posted by Pulaski View Post
Also, If I remember correctly, if you have a business you have to start withholding taxes when you have more than four employees.
One day I might get to that!

Thanks.
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Old Apr 17th 2013, 9:35 pm
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Default Re: Paying a domestic helper

You might also want to take a look at this.....

http://www.taxes.ca.gov/Payroll_Tax/household.shtml

My concern Geoff is that you PROTECT YOURSELF....ie: should you ever have a falling out with someone you've hired - you want to be sure you're on the right side of the law - right?

ps: Look at this as well:
http://www.irs.gov/pub/irs-pdf/i1040sh.pdf

Last edited by MMcD; Apr 17th 2013 at 9:47 pm. Reason: added another link
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Old Apr 17th 2013, 9:36 pm
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Default Re: Paying a domestic helper

Originally Posted by GeoffM View Post
We want to use the services of a childminder/home help and the candidate has broached the idea of her being self employed - I pay her without withholding anything and she sorts out the taxes, medicare, California stuff, etc etc. Is this allowed? All I can find is http://www.irs.gov/publications/p926/ar02.html which tells me what I need to do if I sort out the taxes, but not whether she can do it herself.

Thanks.
That document just defines what is a household worker but I think you would likely want to refer to the child and dependent care tax credit document in order to get the tax credit.

http://www.irs.gov/taxtopics/tc602.html
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Old Apr 17th 2013, 9:53 pm
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Default Re: Paying a domestic helper

Originally Posted by Michael View Post
That document just defines what is a household worker but I think you would likely want to refer to the child and dependent care tax credit document in order to get the tax credit.

http://www.irs.gov/taxtopics/tc602.html
Thanks both. I'm not sure the child care tax credit would apply as that is not the sole role. I guess that can wait though; my accountant is somewhat busy at this time of year to ask that sort of question!
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Old Apr 17th 2013, 11:33 pm
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Default Re: Paying a domestic helper

There is a threshold amount after which you have to pay what is known colloquially as the 'nanny tax'. I think the amount is the trigger, not their wishes. Maybe if they were incorporated as an LLC or something you could pay them as a service.

http://workingmoms.about.com/od/fina...t/Nannytax.htm
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Old Apr 18th 2013, 12:08 am
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Default Re: Paying a domestic helper

Originally Posted by penguinsix View Post
There is a threshold amount after which you have to pay what is known colloquially as the 'nanny tax'. I think the amount is the trigger, not their wishes. Maybe if they were incorporated as an LLC or something you could pay them as a service.

http://workingmoms.about.com/od/fina...t/Nannytax.htm
Hmm, for nannys yes, but perhaps this is a distinction I'm unclear on - if somebody comes into my house and cooks and cleans the house in general, as well as looks after the kids, is she a nanny or something else? It would appear that the IRS takes a dim view on paying nannies as subbies, yet she's not just a nanny - if Wikipedia is anything to go by, she's a "mother's helper". Might be worthy of note that I'm at home all day with her, so she's not solely in charge of the kids except for maybe an hour or three if I need to pop out.
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Old Apr 18th 2013, 12:23 am
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Default Re: Paying a domestic helper

"Nanny" or whatever, it's just a nickname to make it easier to remember. Technically it's part of the "Household Employee" rules but since most Americans think having a butler and valet and whatnot is a bit too posh a la Downton Abbey so they just say 'nanny tax' as an easier way to refer to the law.

http://www.4nannytaxes.com/index.cfm...t/nanny-taxes/

The "nanny tax" applies to any houseworker. "Household employees include nanny, babysitter, companion, housekeeper, cleaning lady (individual), maid, cook, personal assistant, senior caregiver, house manager, caretaker, butler, valet, and driver."

Note on that link there is away around this if they meet some specific rules:

http://www.4nannytaxes.com/index.cfm...or-contractor/
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Old Apr 18th 2013, 12:34 am
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Default Re: Paying a domestic helper

Originally Posted by penguinsix View Post
"Nanny" or whatever, it's just a nickname to make it easier to remember. Technically it's part of the "Household Employee" rules but since most Americans think having a butler and valet and whatnot is a bit too posh a la Downton Abbey so they just say 'nanny tax' as an easier way to refer to the law.

http://www.4nannytaxes.com/index.cfm...t/nanny-taxes/

The "nanny tax" applies to any houseworker. "Household employees include nanny, babysitter, companion, housekeeper, cleaning lady (individual), maid, cook, personal assistant, senior caregiver, house manager, caretaker, butler, valet, and driver."

Note on that link there is away around this if they meet some specific rules:

http://www.4nannytaxes.com/index.cfm...or-contractor/
Thanks - those are useful links. I'll have to sort out the taxes then: I can't see any other way around it. Note that I'm looking into this only because she asked, not because I want to avoid any legal duties/obligations.

(and with regard to the "posh" ideas, this is actually working out about the same cost as sending two kids to daycare, plus we get other help too!)
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Old Apr 18th 2013, 1:58 am
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Default Re: Paying a domestic helper

Originally Posted by GeoffM View Post
yet she's not just a nanny

Might be worthy of note that I'm at home all day with her.
Photo, or it is not happening.

I get the impression most are paid cash in hand and documentation may be an issue.
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