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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121144  
Subject: Household Employee? Date: 8/27/2012 4:57 PM
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MIL is hiring a part time aide. The aide will be working about 30 hours a month. I wasn't involved in the intial interviews. The one selected isn't working for an agency. It has been very difficult to get my MIL to accept that she needs help and find someone that she will let into the house. Dealing with tax issues will be much simpler.

I should have sent questions for the interview, but that is history. Now, I just need to understand what needs to be done.

Are household employees normally issued W-2? It looks like for federal FICA, FUTA and Medicare are handled with the employers tax return. California would require withholding of SDI. If based only on this income, state and federal tax withholding should be very low. A W4 would be needed to obtain her SSN and withholding information.

My MIL is not her only client.

If she has setup a business does it change the reporting?
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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 116555 of 121144
Subject: Re: Household Employee? Date: 8/27/2012 5:18 PM
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Are household employees normally issued W-2?

Yes, assuming that there is an employer/employee relationship. Stop one is Form SS-8, which has the 20 common law questions figuring in this "facts and circumstances" determination. (This form doesn't have to be filed anywhere, it's just a decision aid.)

The situation you describe sounds like employer/employee. The employer's requirements are in Pub 926. Don't forget that there's also a requirement to establish that the worker is legal to work. At the Federal level income tax withholding must be voluntary by both parties.

A word of warning. MIL may find that the worker isn't willing to work on the books. Better to find out before the worker starts stealing from MIL as well as the gummint.

Phil
Rule Your Retirement Home Fool

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Author: Myownigloo Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 116556 of 121144
Subject: Re: Household Employee? Date: 8/27/2012 5:31 PM
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If she has setup a business does it change the reporting?


Check out whether she's set up as an independent contractor. (She'd have to supply her own materials for cleaning and such, as well as other requirements.)

If that's the case, you'd issue a 1099 instead.

Disclaimer: I'm not a tax expert in any way, shape or form. You'll have to check out the details and differences yourself on this.

MOI

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 116557 of 121144
Subject: Re: Household Employee? Date: 8/27/2012 6:57 PM
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Phil,

I understand your pessimistic attitude, but doesn't apply in this situation. The aide is not the sharpest tack in the box. She is competent and the right personality for the position. Her family is close friends with my daughter-in-law. She is legal. Unlike most, she may actually be a native Californias.

I will read Publication 926.

Thank you

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