Publication 926 - Household Employer'S Tax Guide - Internal Revenue Service

4. An employee who is under the age of 18 at any time

Total cash wages paid to Jane $2,300.00

during the year. Exception: Count these wages if

($50 x 46 weeks)

providing household services is the employee’s prin-

cipal occupation. If the employee is a student, provid-

Jane’s share of:

ing household services is not considered to be his or

Social security tax . . . . . . . .

$96.60

her principal occupation.

($2,300 x 4.2% (.042))

Also, if your employee’s cash wages reach $110,100

Medicare tax . . . . . . . . . . . .

$33.35

(maximum wages subject to social security tax) in 2012,

($2,300 x 1.45% (.0145))

do not count any wages you pay that employee during

the rest of the year as social security wages to figure

social security tax. (Continue to count the employee’s

Mary’s share of:

Social security tax . . . . . . . .

$142.60

cash wages as Medicare wages to figure Medicare tax.)

($2,300 x 6.2% (.062))

If you provide your employee transit passes to commute

to your home, do not count the value of the transit passes

Medicare tax . . . . . . . . . . . .

$33.35

(up to $125 (subject to change) per month for 2012) as

($2,300 x 1.45% (.0145))

wages. A transit pass includes any pass, token, fare card,

Amount reported on Form W-2 and Form W-3:

voucher, or similar item entitling a person to ride on mass

Box 1: Wages, tips . . . . . . . . . . . . . . . . .

$2,300.00

transit, such as a bus or train.

Box 4:

Social security tax withheld . . . . .

96.60

If you provide your employee parking at or near your

Box 6:

Medicare tax withheld . . . . . . . . .

33.35

home or at or near a location from which your employee

For information on withholding and reporting federal

commutes to your home, do not count the value of parking

income taxes, see Publication 15, (Circular E), Employer’s

(up to $240 per month for 2012) as wages.

Tax Guide.

If you reimburse your employee for transit passes or

parking, you may be able to exclude the reimbursement

Not withholding the employee’s share. If you prefer to

amounts. See Publication 15-B, Employer’s Tax Guide to

pay your employee’s social security and Medicare taxes

Fringe Benefits, for special requirements for this exclusion.

from your own funds, do not withhold them from your

employee’s wages. The social security and Medicare

taxes you pay to cover your employee’s share must be

Withholding the employee’s share. You should with-

included in the employee’s wages for income tax pur-

hold the employee’s share of social security and Medicare

poses. However, they are not counted as social security

taxes if you expect to pay your household employee cash

and Medicare wages or as federal unemployment (FUTA)

wages of $1,800 or more in 2012. However, if you prefer to

wages.

pay the employee’s share yourself, see Not withholding the

employee’s share, next.

Example. In 2012 you hire a household employee (who

You can withhold the employee’s share of the taxes

is an unrelated individual over age 18) to care for your child

even if you are not sure your employee’s cash wages will

and agree to pay cash wages of $100 every Friday. You

be $1,800 or more in 2012. If you withhold the taxes but

expect to pay your employee $1,800 or more for the year.

then actually pay the employee less than $1,800 in cash

You decide to pay your employee’s share of social security

wages for the year, you should repay the employee.

and Medicare taxes from your own funds. You pay your

Withhold 5.65% (4.2% for social security tax and 1.45%

employee $100 every Friday without withholding any so-

cial security or Medicare taxes.

for Medicare tax) from each payment of social security and

Medicare wages. You can use Table 3 to figure the proper

For social security and Medicare tax purposes, your

employee’s wages each payday are $100. For each wage

amount to withhold. You will pay the amount withheld to

payment, you will pay $13.30 when you pay the taxes. This

the IRS with your share of the taxes. Do not withhold any

is $5.65 ($4.20 for social security tax + $1.45 for Medicare

social security tax after your employee’s social security

tax) to cover your employee’s share plus $7.65 ($6.20 for

wages for the year reach $110,100.

social security tax + $1.45 for Medicare tax) for your share.

If you make an error by withholding too little, you should

For income tax purposes, your employee’s wages each

withhold additional taxes from a later payment. If you

payday are $105.65 ($100 + the $5.65 you will pay to cover

withhold too much, you should repay the employee.

your employee’s share of social security and Medicare

taxes).

Example. On February 13, 2012, Mary Brown hired

Jane R. Oak (who is an unrelated individual over age 18) to

Federal Unemployment (FUTA) Tax

care for her child and agreed to pay cash wages of $50

every Friday. Jane worked for the remainder of the year (a

The federal unemployment tax is part of the federal and

total of 46 weeks). Mary did not give Jane a Form W-4 to

state program under the Federal Unemployment Tax Act

request federal or state tax withholding. The following is

(FUTA) that pays unemployment compensation to workers

the information Mary will need to complete Schedule H,

who lose their jobs. Like most employers, you may owe

Form W-2, and Form W-3. See the completed examples of

both the federal unemployment tax (the FUTA tax) and a

Schedule H, Form W-2, and Form W-3 for 2012 near the

state unemployment tax. Or, you may owe only the FUTA

end of this publication.

tax or only the state unemployment tax. To find out

Page 6

Publication 926 (March 2012)

Publication 926 - Household Employer'S Tax Guide - Internal Revenue Service - 2012 Page 6

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