Household Employee

What Is A Household Employee?

A household employee is an individual who is paid to provide a service within their employer’s residence. A worker is generally a household employee if the employer can control what work is done and how it is done.

Deeper Definition

Household employees work and provide all services at their employer’s place of residence. Some examples of household employees (or household workers) include babysitters, nannies, and gardeners. Independent contractors such as repairmen, carpenters, and plumbers are not considered household employees. These days, employers choose what kinds of work a household employee is responsible for and the manner in which that work is expected to be completed. 

The Internal Revenue Service (IRS) distinguishes between household employees and independent contractors. This is based on whether the employer or taxpayer can determine not only the work that is performed but also how it is carried out. If the worker decides how they work and how a job is done, they are considered to be a self-employed worker. In this case, they are not a household worker. Such individuals provide their own tools and offer their services to the public as independent businesspeople. The IRS sees a household employee as having work decided by an employer. They see an independent contractor as having work defined by the worker.

If the worker is an employee, it does not matter if whether the work they perform is full-time or part-time or if they were found and hired with the use of an employment agency or via a list provided by an agency or labor organization. Household workers may be paid on an hourly, daily, weekly, or per-job basis.

Household Employee Example

Some common examples of household workers include the following: babysitters, caretakers, cleaning people, domestic workers, drivers, health aides, housekeepers, maids, nannies, private nurses, and yard workers.

As of 2021, individuals who hire household employees that they pay a total of more than $2,300 in cash wages during the tax year must pay Social Security, Medicare, and Federal Unemployment taxes on this employee’s wages and may be required to pay taxes at the state level as well. These taxes on household employees are commonly known as the “nanny tax.”