Do Social Security taxes have to be withheld from a household worker’s earnings?

It depends on how much the worker earns. If you paid $2,600 or more to a home health aide, cook, gardener or other household employee in 2023, you are required to deduct Social Security and Medicare taxes from their wages and report the information to the Social Security Administration (SSA) and the Internal Revenue Service.

Your responsibilities as employer don't end there. You also must make Social Security and Medicare payments that match the withholding. Here's how it works for the 2023 tax year:

• For Social Security, you withhold 6.2 percent of the worker's gross pay on income up to $160,200 and pay an additional 6.2 percent yourself. 2023 earnings above $160,200 are not subject to Social Security taxes (the threshold rises to $168,600 in 2024).
• For Medicare, you withhold 1.45 percent of the employee's wages up to $200,000 and 2.35 percent on earnings above that amount.
• Your employer share of Medicare taxes remains at 1.45 percent, regardless of how much the employee ends up making for the year.

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Keep comprehensive records of the names, addresses and Social Security numbers of all household workers and what you paid them. And make sure you hit these tax-season deadlines:

• Issue W-2s to all household workers by Jan. 31 of the following year.
• Report their wages to Social Security by Jan. 31 of the following year. You can file the information electronically using SSA's Business Services Online portal.
• Pay your share of Social Security and Medicare taxes and the taxes you withheld from the employee's paycheck as part of your regular tax return, the one typically due by April 15.
• Throughout the year, employers who withhold Social Security and Medicare taxes must file Form 941 and pay their portion as well as report taxes withheld from employee paychecks each quarter on Jan. 31, April 30, July 31 and Oct.31. 

Following these procedures promptly and properly is important, and not just because of the financial penalties if you don't. Reporting the wages and taxes ensures household workers get the credits that qualify them for Social Security benefits and Medicare coverage in the future.

You can find detailed information on the tax rules and employers’ responsibilities in the SSA brochure "Household Workers" and the IRS's "Household Employer's Tax Guide."

Keep in mind

• Cash you give a household worker for food, lodging and transportation counts as wages and must be included in the withholding calculation. However, you need not include the monetary value of these items if you provide them directly to the employee.
• Specific rules apply to minors or members of your immediate family you pay to do household work. You do not need to pay Medicare or Social Security taxes on wages for housework performed by:
  • Your spouse.
  • Your child if younger than 21. The normal rules apply if you pay a child who is 21 or older.
  • Your parents, unless they are caring for your minor or disabled children and you are widowed, divorced or single, or living with a mentally or physically disabled spouse who is unable to care for them.
  • A babysitter or other worker younger than 18 unless household work is that person's primary occupation.