Is the Gardener an Employee?

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When you need some hired help around the house, you’ll need to know how to handle your tax obligations. This post will tell you how.

It may seem ok to hire a family friend just graduating high school for the summer to take care of the kids and pay some cash to her every week. Or perhaps have one of the guys from church do the lawn every week. You know, “under the table.” It’s normal to feel this way when you’re part of a close community. But the consequences can be dire if you didn’t do your part to meet tax requirements.

Say that family friend stays on and she winds up taking care of your kids while she goes to college for the next four years and then looks for a real job and can’t find one. So she then goes to claim unemployment. She’ll list who her past employers were and the state and IRS will find out. This can lead to a number of undesirable consequences like back taxes, interests, penalties and even tax evasion charges.

Any time you hire someone that does not qualify as an independent contractor, you will need to hire them as an employee. Here’s what you need from them to get started off on the right foot:

  1. An EIN: This is an employer identification number. You’ll can get that here and that is what you’ll use to get an ID for the state.
  2. You’ll also need to keep up with how much you are paying and make sure the right amount of taxes are withheld. We can help you with that with our Payroll services. (You’ll need to pay quarterly taxes for both state and federal.)
  3. You should have an I-9 as well to prove that your employee is a legal resident. There are 3rd party vendors you can use to process and verify I-9s.
  4. You’ll also have to provide the w-2 to employees at the end of the fiscal year.
  5. You’re employee will also have to complete a W-4 upon hire which is what will tell you how much you need to withhold each month.

We’re more than happy to help you answer any questions you may have about meeting your obligations in regards to paying for household assistance and caregivers. Give us a call today.