hiring domestic help?

Question

I'm thinking of hiring a housekeeper. Living in a small apartment, I only need help aprox. 8 hours a week. Four hours twice a week. I plan on paying $10 an hour after first 4 weeks, which of course will be $80 a week.

My question is, at this amount, do I report this for tax reasons? Most of those I have considered, prefer just having the cash, opposed to a formal paycheck with taxes taken out.

I want to do what's right, and know if a person's income is under a certain amount, it doesn't have to be taxed, but I can't find info as to what this amount is. In case it varies from state to state, I am in NJ.

Thanks for any help.

Answer 1

Go to IRS.gov and search for "Household Employee".

There is to much to post here but as this person would be your employee, you would have to apply for a federal ID number, pay unemployment taxes and withhold and pay other taxes.

Answer 2

You always need to report wages. You and your housekeeper need to determine is she is an independent contractor or your employee.

For federal, you need to file a 1099-MISC if she is an independent contractor for wages or a W-2 if she is your employee and report your household expenses on Schedule H.

If she is your employee, then you need to pay your share of payroll taxes. You can deduct these and her wages.

If she is an independent contractor, she accepts the responsiblity to pay her own taxes. You file a 1099-MISC and deduct her wages on your return. You do not pay her taxes for her.

Thresholds apply to how SHE is taxed, not you. Tax must still be paid.

Answer 3

what you need to do is hire a housekeeper through a cleaning agency, that is bonded and insured. they will take care of the taxes, workers-comp and all that. it might be a little more, but in the end, you don't have to deal with the whole paperwork nightmare. get qotes from agency's in your area.