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Youll realize no tax savings if you put your spouse on the payroll and pay him or her cash wages. Employee wages you pay your spouse are fully taxable. Your spouse-employee must pay federal and state income tax on wages. And you and your spouse must each pay half of the Social Security and Medicare tax on wages.
Employers generally dont withhold or pay FICA taxes on wages they pay to their spouse, a child under age 21, a parent or an employee under age 18 unless performing household work is their principal occupation. But, they need to report the compensation on a Form W-2, Wage and Tax Statement.
Household income is the adjusted gross income from your tax return plus any excludible foreign earned income and tax-exempt interest you receive during the taxable year.
Some examples of workers who do household work are: Babysitters. Caretakers. Cleaning people. Domestic workers. Drivers. Health aides. Housekeepers. Maids.
Schedule H is a tax form used to report household employee employment taxes. Household employees, such as housekeepers, nannies, and babysitters, include individuals who complete tasks that the employer controls.
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And if your private service professional asks, you may also want to withhold federal and state employment taxes. Domestic employees include nannies, butlers, private nurses, housekeepers, gardeners, and more anyone who works in your home, if you control when and how they do the work.
Domestic workers, such as home care workers, house cleaners and nannies, provide services of a household nature in or about a private home.
File a 2011 Return Today. You can complete and sign the 2011 IRS Tax Return Forms here on eFile.com. Then, download, print, and mail the 2011 IRS Forms to the address listed on them. For state returns, select your state(s) and download, complete, print, and sign your 2011 State Tax Return income forms.

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