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taxmap/pubs/p503-003.htm#TXMP40261b64 Employment Taxes for  Household Employers(p12)

Employment Tax, Household Employers

If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer. If you are a household employer, you will need an employer identification number (EIN) and you may have to pay employment taxes. If the individuals who work in your home are self-employed, you are not liable for any of the taxes discussed in this section. Self-employed persons who are in business for themselves are not household employees. Usually, you are not a household employer if the person who cares for your dependent or spouse does so at his or her home or place of business.

If you use a placement agency that exercises control over what work is done and how it will be done by a babysitter or companion who works in your home, the worker is not your employee. This control could include providing rules of conduct and appearance and requiring regular reports. In this case, you do not have to pay employment taxes. But, if an agency merely gives you a list of sitters and you hire one from that list, and pay the sitter directly, the sitter may be your employee.

If you have a household employee, you may be subject to:

1. Social security and Medicare taxes,
2. Federal unemployment tax, and
3. Federal income tax withholding.

Social security and Medicare taxes are generally withheld from the employee's pay and matched by the employer. Federal unemployment (FUTA) tax is paid by the employer only and provides for payments of unemployment compensation to workers who have lost their jobs. Federal income tax is withheld from the employee's total pay if the employee asks you to do so and you agree.

For more information on a household employer's tax responsibilities, see Publication 926 and Schedule H (Form 1040) and its instructions.

taxmap/pubs/p503-003.htm#TXMP2fd75f51 State employment tax.(p12)

You may also have to pay state unemployment tax. Contact your state unemployment tax office for information. You should also find out whether you need to pay or collect other state employment taxes or carry worker's compensation insurance. A list of state unemployment tax agencies, including addresses and phone numbers, is in Publication 926.

taxmap/pubs/p503-003.htm#w15004M01

Worksheet A.mWorksheet for 2006 Expenses Paid in 2007 Use this worksheet to figure the credit you may claim for 2006 expenses paid in 2007. 1.   Enter your 2006 qualified expenses paid in 2006 1.                2.   Enter your 2006 qualified expenses paid in 2007 2.                3.   Add the amounts on lines 1 and 2 3.                4.   Enter $3,000 if care was for one qualifying person ($6,000 if for two or more) 4.                5.   Enter any dependent care benefits received for 2006 and excluded from your income (from line 27 of 2006 Form 2441 or line 21 of 2006 Schedule 2 (Form 1040A)) 5.                6.   Subtract the amount on line 5 from the amount on line 4 and enter the result 6.                7.   Compare your earned income for 2006 and your spouse's earned income for 2006 and enter the smaller amount 7.                8.   Compare the amounts on lines 3, 6, and 7 and enter the smallest amount 8.                9.   Enter the amount on which you figured the credit for 2006 (from line 6 of 2006 Form 2441 or Schedule 2 (Form 1040A)) 9.                10.   Subtract the amount on line 9 from the amount on line 8 and enter the result. If zero or less, stop here. You cannot increase your credit by any previous year's expenses 10.                11.   Enter your 2006 adjusted gross income (from line 38 of your 2006 Form 1040, line 22 of your 2006 Form 1040A, or line 36 of your 2006 Form 1040NR) 11.                12.   Find your 2006 adjusted gross income in the table below and enter the corresponding decimal amount here 12.                        IF your 2006 adjusted gross income is:   THEN the decimal                 Over:   But not over:     amount is:                 $0000 — $15,0000     .35                 15,000 — 17,000     .34                 17,000 — 19,000     .33                 19,000 — 21,000     .32                 21,000 — 23,000     .31                 23,000 — 25,000     .30                 25,000 — 27,000     .29                 27,000 — 29,000     .28                 29,000 — 31,000     .27                 31,000 — 33,000     .26                 33,000 — 35,000     .25                 35,000 — 37,000     .24                 37,000 — 39,000     .23                 39,000 — 41,000     .22                 41,000 — 43,000     .21                 43,000 — No limit     .20           13.   Multiply line 10 by line 12. Add this amount to your 2007 credit and enter the total on line 9 of your 2007 Form 2441 or Schedule 2 (Form 1040A). Enter the following on the dotted line next to line 9 of Form 2441 or in the space to the left of line 9 on Schedule 2 (Form 1040A): "CPYE" The amount of this credit for a prior year's expenses The name and taxpayer identification number of the person for whom you paid the prior year's expenses 13.                  Worksheet A.mFilled-in Worksheet for 2006 Expenses Paid in 2007 Use this worksheet to figure the credit you may claim for 2006 expenses paid in 2007. 1.   Enter your 2006 qualified expenses paid in 2006 1.   $2,000 2.   Enter your 2006 qualified expenses paid in 2007 2.   600 3.   Add the amounts on lines 1 and 2 3.   2,600 4.   Enter $3,000 if care was for one qualifying person ($6,000 if for two or more) 4.   3,000 5.   Enter any dependent care benefits received for 2006 and excluded from your income (from line 27 of 2006 Form 2441 or line 21 of 2006 Schedule 2 (Form 1040A)) 5.   0 6.   Subtract the amount on line 5 from the amount on line 4 and enter the result 6.   3,000 7.   Compare your earned income for 2006 and your spouse's earned income for 2006 and enter the smaller amount 7.   14,000 8.   Compare the amounts on lines 3, 6, and 7 and enter the smallest amount 8.   2,600 9.   Enter the amount on which you figured the credit for 2006 (from line 6 of 2006 Form 2441 or Schedule 2 (Form 1040A)) 9.   2,000 10.   Subtract the amount on line 9 from the amount on line 8 and enter the result. If zero or less, stop here. You cannot increase your credit by any previous year's expenses 10.   600 11.   Enter your 2006 adjusted gross income (from line 38 of your 2006 Form 1040, line 22 of your 2006 Form 1040A, or line 36 of your 2006 Form 1040NR) 11.   30,000 12.   Find your 2006 adjusted gross income in the table below and enter the corresponding decimal amount here 12.   .27         IF your 2006 adjusted gross income is:   THEN the decimal                 Over   But not over     amount is:                 $0000 — $15,0000     .35                 15,000 — 17,000     .34                 17,000 — 19,000     .33                 19,000 — 21,000     .32                 21,000 — 23,000     .31                 23,000 — 25,000     .30                 25,000 — 27,000     .29                 27,000 — 29,000     .28                 29,000 — 31,000     .27                 31,000 — 33,000     .26                 33,000 — 35,000     .25                 35,000 — 37,000     .24                 37,000 — 39,000     .23                 39,000 — 41,000     .22                 41,000 — 43,000     .21                 43,000 — No limit     .20           13.   Multiply line 10 by line 12. Add this amount to your 2007 credit and enter the total on line 9 of your 2007 Form 2441 or Schedule 2 (Form 1040A). Enter the following on the dotted line next to line 9 of Form 2441 or in the space to the left of line 9 on Schedule 2 (Form 1040A): "CPYE" The amount of this credit for a prior year's expenses The name and taxpayer identification number of the person for whom you paid the prior year's expenses 13.   $162

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