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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7426
Experience:  15years with H & R Block. Divisional leader, Instructor
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I have a househould employee who works only in my house (she

Resolved Question:

I have a househould employee who works only in my house (she actually lives with us). We brought her to the US under B1 visa, linked to my L1 visa. We got her Employment Authorization Document, and she has started working. For now, we haven't paid any employment taxes. What document (i.e. Social Security Number or Individual Taxpayer Identification Number) does she need so that I can then withhold her taxes / pay her taxes when filing the tax return in 2014? Also, do I need to pay state taxes for her?
Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.

Robin D :

Hello and thank you for using Just Answer,
She will need an ITIN (individual Taxpayer Identification Number).


If you have a household employee, you may need to withhold and pay social security and Medicare taxes, pay federal unemployment tax, or both. If you pay her more than $1800 then you do need to withhold if she is a resident alien (has been her more than 183 days).


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.

Robin D :

For New Jersey, an employer whose only employees are household workers may report and remit gross income tax withholding and other payments (contributions for unemployment insurance, healthcare subsidy, workforce development, disability insurance, and family leave insurance) on an annual basis. Form NJ-927-H, the “Domestic Employer’s Annual Report,” and Form WR-30, Employer Report of Wages Paid, must be filed electronically on or before the January 30 next following the close of the calendar year.

Robin D :

When you file your 2013 federal income tax return in 2014, attach Schedule H (Form 1040) to your Form 1040, 1040NR, 1040-SS, or 1041. Use Schedule H to figure your total household employment taxes (social security, Medicare, FUTA, and withheld federal income taxes). Add these household employment taxes to your income tax. Pay the amount due by April 15, 2014.

Robin D :

I hope this information is helpful.

Robin D :

You may wish to look to the IRS publication 926
http://www.irs.gov/publications/p926/ar02.html#en_US_2013_publink100086732

Robin D :

That pub deals with household employees and what you need to do along with all the forms.

Robin D :

Thank you in advance for a positive rating.

Robin D :

My goal is to provide you with excellent service today. If there’s anything else I can do, let me know – it’s been a pleasure working with you and I hope to assist you again soon!

Robin D :

I think you may need more info about that ITIN. An Individual Taxpayer Identification Number (ITIN) is a tax processing number issued by the Internal Revenue Service. It is a nine-digit number that always begins with the number 9 and has a range of 70-88 in the fourth and fifth digit.
ITINs are issued regardless of immigration status because both resident and nonresident aliens may have a U.S. filing or reporting requirement under the Internal Revenue Code.
If you do not have a SSN and are not eligible to obtain a SSN, but you have a requirement to furnish a federal tax identification number or file a federal income tax return, you must apply for an ITIN.

Robin D :

Use the latest revision of Form W-7, Application for IRS Individual Taxpayer Identification Number to apply. Attach a valid federal income tax return, unless you qualify for an exception, and include your original proof of identity or copies certified by issuing agency and foreign status documents.

Customer:

But ITIN is only given to individuals that are not eligible to Social Security Number (SSN), and she is eligible to SSN because she is a non-immigrant allien with work authorization... So I don't understand why you say that she will need an ITIN.... Please clarify.

Robin D :

I gave you the info for the ITIN in case she was not eligible.

Robin D :

If she can get the SSN then that is what she applies for.

Robin D :

You will withhold the SS and Medicare taxes for the wages you pay.

Robin D :

You will report the money on the Schedule H with your return and the NJ form I advised earlier about.

Customer:

Ok thanks. I am not quite clear on another part of your answer... when you say "withhold", what do you mean by that? what does it mean to withhold SS and Medicare taxes in reality? do I need to pay this monthly to the government? or what?

Customer:

or, when i file my 2013 taxes in 2014, then I will need to pay the taxes?

Robin D :

No you will keep the records of your payments to her and withhold from her pay the FICA (SS and Medicare) amounts).

Robin D :

When you file teh Schedule H you will hand over the money at that time as well as your payments for the same.

Robin D :

The Schedule H is filed with your tax return.

Customer:

so "to withhold" actually means that I will keep the money with me, to then pay to the government only in 2014?

Robin D :

Correct, it is withheld from her wages though so you will retain her portion of teh SS and Medicare paymenst then remit when you file your return.

Robin D :

the* sorry I make that typo all the time

Customer:

so technically, at this point in time, I don't owe anything to the government...

Robin D :

Correct

Robin D :

Take a little time when you can to look over the IRS pub I sent the link for

Robin D :

Can I help you with anything more?

Customer:

give me a sec

Customer:

so in terms of the taxes involved, I need to consider the following:

Customer:

1- SS tax; 2- Medicare Tax; (both federal)

Customer:

and then 3- New Jersey state tax.

Customer:

are these the only tax 3 components? or am I missing any other? how do I know the % of each of them?

Robin D :

The first $113,700 of wages is taxed at 6.2% for Social Security. Anything above this amount is not taxed. This is taxed at 1.45% of wages and there is no wage base limit.

Customer:

ok, social security is clear. what is the tax at 1.45%? is it medicare?

Robin D :

Medicare is the part for medical.

Robin D :

Yes that part was for Medicare.

Customer:

yes, i know, I am just asking if the 1.45% is for medicare...

Customer:

ok got it. what about state New Jersey tax?

Robin D :

I was looking to see the rate for New Jersey. You do not have to withhold and remit until you file your own for the state. One sec...........

Robin D :

Unemployment tax wage base increases to $30,300 and the employee withholding rate is 0.705% (0.3825% unemployment fund, 0.0425% workforce development, 0.2% disability, 0.08% family leave insurance). The maximum employee contribution is $207.56.

Customer:

now, these are only the employee share of tax right? I mean, as an employeer, I would also need to pay my share when I file my tax return, right?

Robin D :

That is correct

Customer:

do all 3 taxes (social security, medicare, NJ state) apply to myself as employeer? same percentages?

Robin D :

Sorry

Robin D :

I got kicked out

Robin D :

It is correct that you pay at filing time but the rates were total

Customer:

my question was: do all 3 taxes (social security, medicare, NJ state) apply to myself as employeer? same percentages?

Robin D :

You split those with teh employee

Robin D :

You pay and they pay yes

Robin D :

I see what you mean

Robin D :

The current tax rate for social security is 6.2% for the employer and 6.2% for the employee, or 12.4% total. The current rate for Medicare is 1.45% for the employer and 1.45% for the employee,

Robin D :

Does that make it clearer?

Customer:

that's clear. and the same would apply for the NJ state tax, which is minimum % anyway so it won't make much difference...

Robin D :

Correct

Customer:

so, if I want to be prepared for the tax bill for next year, all I have to do is to ensure I withhold some 8% from the employee and save some other 8% from my side, and I will be able to cover for the tax due to this employee when I submit Schedule H, right?

Robin D :

For teh SSN and Medicare yes.

Robin D :

the

Robin D :

You will issue a W2 to the employee showing their income and "withheld' amounts

Robin D :

They then will file their US return showing the income

Robin D :

They will then pay tax on the income.

Robin D :

Provided they are required to file based on the income they receive.

Customer:

ok clear, although complex :-)

Robin D :

After you complete it the first time it will be very simple

Customer:

all right Robin - thank you for your assistance.

Robin D :

Your positive rating is always thanks enough.

Robin D :

I really enjoyed working with you – please feel free to request me again when you come back to ask another question.


 

Customer:

how can i ensure my question is directed to you?

Robin D :

When you visit your question homepage, you’ll see a link to request me again. This link displays and works whether I am online or offline.

Customer:

ok great. thanks.

Robin D :

You are most welcome

Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7426
Experience: 15years with H & R Block. Divisional leader, Instructor
Robin D. and 5 other Tax Specialists are ready to help you

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