Publication 926 - Household Employer'S Tax Guide

earned) are social security and Medicare wages. However,

b) Your marital status is one of the following.

any noncash wages you pay do not count as social secur-

i) You are divorced and have not remarried,

ity and Medicare wages.

ii) You are a widow or widower, or

If you pay the employee less than $1,400 in cash wages

in 2003, none of the wages you pay the employee are

iii) You are living with a spouse whose physical

social security and Medicare wages and neither you nor

or mental condition prevents him or her from

your employee will owe social security or Medicare tax on

caring for your child for at least 4 continuous

those wages.

weeks in a calendar quarter.

Cash wages. Cash wages include wages you pay by

check, money order, etc. Cash wages do not include the

4) An employee who is age 17 or younger at any time

value of food, lodging, clothing, and other noncash items

during the year. Exception: Count these wages if

you give your household employee. However, cash you

providing household services is the employee’s prin-

give your employee in place of these items is included in

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

cash wages.

viding household services is not considered to be his

State disability payments treated as wages. Certain

or her principal occupation.

state disability plan payments that your household em-

Also, if your employee’s cash wages reach $87,000 in

ployee may receive are treated as social security and

2003, do not count any wages you pay that employee

Medicare wages. For more information about these pay-

during the rest of the year as social security wages to

ments, see the instructions for Schedule H (Form 1040),

figure social security tax. (But continue to count the

Household Employment Taxes, and the notice issued by

employee’s cash wages as Medicare wages to figure

the state.

Medicare tax.)

Wages not counted. Do not count wages you pay to

If you reimburse your employee for the amount paid for

any of the following individuals as social security and

transit passes used to commute to your home, do not

Medicare wages, even if these wages are $1,400 or more

count the reimbursement (up to $100 per month for 2002)

during the year.

as wages. See Publication 15 – B, Employer’s Tax Guide to

Fringe Benefits, for the 2003 amount. A transit pass in-

1) Your spouse.

cludes any pass, token, farecard, voucher, or similar item

2) Your child who is age 20 or younger.

entitling a person to ride on mass transit, such as a bus or

train.

3) Your parent. Exception: Count these wages if both

If you reimburse your employee for the amount paid for

the following conditions apply.

parking at or near your home or at or near a location from

a) Your parent cares for your child who is either of

which your employee commutes to your home, do not

the following.

count reimbursement (up to $185 per month for 2002) as

wages. See Publication 15 –B for the 2003 amount.

i) Age 17 or younger, or

Withholding the employee’s share. You should with-

ii) Has a physical or mental condition that re-

hold the employee’s share of social security and Medicare

quires the personal care of an adult for at

taxes if you expect to pay your household employee cash

least 4 continuous weeks in a calendar quar-

ter.

wages of $1,400 or more in 2003. However, if you prefer to

Table 2. Household Employer’s Checklist

You may need to do the following things when you have a household employee.

When you hire a household

Find out if the person can legally work in the United States.

employee:

Find out if you need to pay state taxes.

When you pay your household

Withhold social security and Medicare taxes.

employee:

Withhold federal income tax.

Make advance payments of the earned income credit.

Decide how you will make tax payments.

Keep records.

By February 2, 2004:

Get an employer identification number.

Give your employee Copies B, C, and 2 of Form W –2, Wage and Tax

Statement.

By March 1, 2004:

Send Copy A of Form W –2 to the Social Security Administration.

By April 15, 2004:

File Schedule H (Form 1040), Household Employment Taxes, with your

2003 federal income tax return (Form 1040). If you do not have to file a

return, use one of the other filing options, such as the option to file Schedule

H by itself.

Page 4

Publication 926 - Household Employer'S Tax Guide - 2003 Page 4

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