If you have a household employee in 1999, you may need to pay state and federal employment taxes. You generally must add your federal employment taxes to the income tax that you will report on your 1999 federal income tax return.
PLEASE REFER TO THE HOUSEHOLD HELP TAX PAGES IN THE PAYROLL SECTION
The information in this publication applies to you only if you pay someone for household work and that worker is your employee. Household work is work done in or around your home by babysitters, nannies, health aides, private nurses, maids, caretakers, yard workers, and similar domestic workers.
A household worker is your employee if you can control not only what work is done, but how it is done. If the worker is your employee, it does not matter whether the work is full time or part time, or that you hired the worker through an agency or from a list provided by an agency or association. It also does not matter whether you pay the worker on an hourly, daily, or weekly basis, or by the job.
If only the worker can control how the work is done, the worker is not your employee but is self-employed. A self-employed worker usually provides his or her own tools and offers services to the general public in an independent business. If an agency provides the worker and controls what work is done and how it is done, the worker is not your employee.
More information about who is an employee is in Publication 15-A, Employer's Supplemental Tax Guide
If you have a household employee, you may need to withhold and pay social security and Medicare taxes, or pay federal unemployment tax, or both. To find out, read Table 1 on page 3.
You do not need to withhold federal income tax from your household employee's wages. But if your employee asks you to withhold it, you can choose to do so. See Do You Need To Withhold Federal Income Tax? on page 5.
If you need to pay social security, Medicare, or federal unemployment tax or choose to withhold federal income tax, read Table 2, Household Employer's Checklist, on page 4 for an overview of things you may need to do.
Child and dependent care expenses. If your household employee cares for your dependent who is under age 13 or your spouse or dependent who is not capable of self care, so that you can work, you may be able to take an income tax credit of up to 30% of your expenses. If you can take the credit, you can include your share of the federal and state employment taxes you pay, as well as the employee's wages, in your qualifying expenses. For information about the credit, get Publication 503, Child and Dependent Care Expenses.
If you do not need to pay social security, Medicare, or federal unemployment tax and do not choose to withhold federal income tax, read State employment taxes, next. The rest of this publication does not apply to you.
State employment taxes. You should contact your state unemployment tax agency to find out whether you need to pay state unemployment tax for your household employee. For the address and phone number, see the list beginning on page 10 of this publication. You should also find out whether you need to pay or collect other state employment taxes or carry workers' compensation insurance