In part one of this post, we began discussing the subject of the often-perplexing complexities that arise with the taxation of household employees.
As we noted in our March 25 post, these so-called “nanny taxes” apply to many more types of workers besides nannies. This includes home health aides, cleaners and numerous others.
In this part of the post, let’s look more closely at some of the exceptions that apply to household workers for tax purposes.
One set of exceptions concerns family members. There is no employment tax obligation involved when you pay your spouse or a child of yours who is under 21.
There is also generally no such obligation when paying your parent. But the paying-your-parent situation is a bit more complicated than paying a spouse or a minor child. As IRS Publication 926 explains, you will need to count wages paid to a parent if two particular conditions apply.
The first condition is that the work done by the parent concerns caring for a child of yours who is under 18 or has a condition – either physical or mental – that requires an adult’s personal care for at least four weeks in a row.
The second condition concerns your marital status. If you are divorced but not remarried, are a widow or widower, or are living with a spouse with a certain type of physical or mental condition, you do not have to pay employment taxes for wages you pay your parent for child care.
Finally, we should also note that wages paid to employees who are under age 18 are generally not subject to employment tax. But there is an exception to this if household services are that workers’ principal occupation.