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Old 01-19-2015, 07:05 PM
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Household Employee Deduction/Expenses

Are there any benefits to having a household employee? If you have someone watching your child and keeping up the home, and you pay them about 20,000/yr, can you deduct the employment taxes you pay for them? If so where? Can you deduct the wages paid? Please advise. Thanks and have a great day.



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Old 01-20-2015, 05:18 AM
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Originally Posted by rosa View Post

#1;Are there any benefits to having a household employee? If you have someone watching your child and keeping up the home, and you pay them about 20,000/yr, can you deduct the employment taxes you pay for them?


#2;If so where?


#3;Can you deduct the wages paid? Please advise. Thanks and have a great day.
#1;in general no as it is your personal expense ;your life is personal, not a business If you were conducting a home-based business, and the person you hired a h/h employee to work in your home was part of generating income for that business, that would be a different story;
But childcare for your children is not an income-producing venture. as you have a household employee , you may need to withhold and pay fica taxes, pay federal unemployment tax, or both.

however, it depends; the irs considers salaries / payroll taxes for household employees to be personal expenses for the employer, and therefore non-deductible. However, in-home care for a dependent without medical issues does not qualify, and although the salary you pay someone to care for a healthy child while you work may be deductible as a childcare credit, the taxes are not; If a household employee is providing service as a caregiver for a disabled individual who qualifies as your dependent, you can deduct your portion of the fica taxes, as well as your payments for federal and state unemployment taxes for the caregiver as med expenses by itemizing them on sch a of 1040 deductions .but, you can not deduct fed tax withheld from employee’s paychecks. You need to deduct on those medical expenses in excess of 10 percent of your agi unless you are 65 or older.




#2;as mentioned above.

#3; You are unable to deduct the wages you pay from your income, although if you hire someone to care for a child younger than 13 or a disabled adult, you might qualify for the child and dependent care tax credit on the expenses paid to the employee. Even if you do, this won't reimburse you for all you paid out. You, as a household employer, are not required to deal with federal or I guess even state income tax withholding for your h/h employees. You can if you want to, and if your employee asks you to do so and you agree. Your employee must provide you with a Form W-4.



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Old 01-21-2015, 05:34 AM
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Dear Wnhough,

Thank you so much for your reply. It was very informative and helpful. Thanks again and have a great day.

Rosa



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