Medicare Taxes and Workers
For those who are household workers, or employ household workers, Medicare and Social Security taxes still apply. For example, a house cook, a baby sitter, gardener or a cleaning person, should know some things about these taxes.
If you are employing someone, this worker could be eligible for Social Security or Medicare some day, and really need it. With this in mind, it is smart to deduct these taxes from his or her wages. You should then pay these taxes to the IRS, and last be reported once a year to the Social Security Administration.
This employee will receive credit toward different benefits including Medicare. For example, this will give credit to the employee in the future if he or she becomes disabled. This also will provide benefits for dependants of the taxpayer. Also, if the worker dies, his or her dependants will be eligible for benefits.
You might be asking yourself, “What wages must be reported?” Well I am glad you asked. The maximum amount a worker can receive without having to deduct Social Security or Medicare and report is $1.699.99. Therefore, any amount about above must have taxes deduced from the wages, and are reported once a year.
Also, those who employ such workers must include all money that you pay to the employees to cover the cost of meals, housing, or even transportation. Make sure you stay on top of this to avoid penalty fees.
You should contact the IRS for different reporting requirements. You can also find help there on and when to file these forms.
Keeping up to date accurate records, such as names, addresses, and Social Security numbers of household workers is important. It is also vital to report accurate wages that were paid.
Again, household workers that receive anything equal to or above $1,700 a year must deduct Social Security and Medicare taxes. Doing so is not only the right and honest thing to do, but will help you out in the end when they are needed the most.
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