Worldandnation: Rules, agencies to know for hiring help

Rules, agencies to know for hiring help

By HELEN HUNTLEY

Want to be legal when you hire household help? Then you need to know the rules.

Employment of household workers is covered under both federal and state laws. If you pay for services through a legitimate third party, such as a maid service or home health care company, you don't have to worry about the details. And some household workers qualify as self-employed independent contractors responsible for their own taxes.

But if you directly employ a maid, babysitter, companion or other household worker, you are obligated to keep records and pay taxes.

"A majority of people are under the misconception that their household employee can be an independent contractor, therefore excusing them from having to deal with any of the taxes," said Stephanie Breedlove, who runs a payroll service for household employees in Austin, Texas. "They're hoping that in their busy lives they can avoid having to deal with it."

One key to whether a household worker is an employee or an independent contractor is who decides what work will be done.

Independent contractors decide when and how to do their jobs; employees do not. The IRS also looks at whether workers provide their own tools and supplies and can realize a profit or a loss on the work they do.

IRS publications cite a lawn care service as an example of an independent contractor and a part-time babysitter/housekeeper as an example of an employee.

"If you give orders for what you want done, you're controlling what the person is assigned to do," IRS spokeswoman Gloria Sutton said. The IRS will provide individual rulings for anyone who is not sure how a worker should be classified.

If you employ household workers, here are the three government agencies to know about:

Immigration and Naturalization Service, (800) 870-3676. Employees must complete form I-9 and show proof of U.S. citizenship or eligibility to work as a legal alien. You need to keep a copy of the information.

Helpful publication: INS Handbook for Employers.

Internal Revenue Service, (800) 829-3676 to order forms, (800) 829-1040 to ask questions. Forms also on IRS Web site (http://www.irs.gov). You must apply for an Employer Identification Number (Form SS4). You and your employee must pay Social Security and Medicare taxes if you pay cash wages of $1,300 or more in 2001 ($1,200 in 2000.)

You can either deduct the employee's share from wages or pay it yourself. You also must pay Federal Unemployment Tax (FUTA) if you pay wages of $1,000 or more in any quarter in either the current or prior year. You calculate your taxes on Schedule H filed with your Form 1040 or 1040A. These taxes are paid along with your regular income tax, either through quarterly estimated tax payments or through withholding.

Helpful publication: Household Employer's Tax Guide (IRS Publication 926.)

Florida Department of Revenue, Unemployment Compensation Employer Information Center (800) 482-8293. You are required to pay state unemployment tax if you pay wages of $1,000 or more in any quarter in either the current or prior year.

Helpful publication: Employer's Handbook (now being revised.)

Household employers are not required to purchase workers' compensation insurance. However, it is a good idea to check with your insurance agent to determine what coverage you have should an employee be injured on your property.

Household employees who want to know whether their earnings were properly reported can request an earnings and benefits estimate from the Social Security Administration by filling out a form that is available on the Internet (http://www.ssa.gov) or by calling (800) 772-1213.