Temporary and Part-Time Employment Law for Household Staff by HomePay

Hiring household staff ethically and correctly is an important part of your onboarding process! This great resource by HomePay explains some key points about employment laws for household staff.

When hiring temporary or part-time household help, such as caregivers, it’s important to understand they are considered your employees rather than independent contractors, as per IRS classification. This distinction matters for payroll and tax obligations. If you pay your household employee less than $2,700 in a year, you’re not required to withhold and report taxes. However, exceeding this amount triggers the need to adhere to IRS tax withholding and reporting requirements, with some states having even lower thresholds for these obligations.

Regardless of payment amount, household employers must comply with state and federal labor laws, including paying overtime for hours worked beyond 40 in a week.

There are financial incentives for properly managing payroll and taxes for household employees. Tax breaks, such as the Flexible Spending Account and the Dependent Care Tax Credit, are available to families with dependent care expenses. These can offset employer tax costs, often significantly. HomePay is a service specializing in household employer payroll, tax, and labor law compliance, offering a solution for managing these aspects efficiently.

To leverage these tax breaks, it’s essential to obtain and record the caregiver’s full name, phone number, and Social Security Number when hiring. Keeping accurate records of care-related expenses and setting up payroll correctly not only ensures legal compliance but also maximizes potential tax savings. For detailed assistance and calculations related to payroll and tax benefits, contacting HomePay for a consultation is recommended.