Is housework becoming a burden? Then you might be considering hiring a housekeeper to help around the home. But before you do, you'll want to understand your legal obligations when it comes to tax and immigration laws.
First, you need to contact the IRS and obtain an employer identification number (EIN). To do this, download IRS Form SS-4. To get your EIN over the phone, contact the IRS at 1-800-829-4933.
You'll be glad to learn that once you've obtained your EIN, you can be automatically enrolled in the Electronic Federal Tax Payment System (EFTPS). This system lets you make federal tax payments online. I highly recommend you do this.
Never assume that you can simply send the IRS a check for taxes you as an employer have withheld. That would be way too simple. Indeed, an employer can actually be fined for sending a check directly to the IRS, if it's too large. (I know, because it happened to me).
You also need to withhold the appropriate taxes from your housekeeper's paycheck. Make certain she completes Form W-4 so you know how many dependents she's claiming. Also, you need to inform your housekeeper about various federal tax provisions such as the "Earned Income Tax Credit."
Next, you need to give your prospective housekeeper Immigration and Naturalization Service Form I-9. If your housekeeper doesn't speak English, you (or someone fluent in your housekeeper's mother tongue) will need to complete it for her (or him). You'll find it helpful to keep a copy of the INS's "Handbook for Employers" handy so you understand what forms of identification are acceptable. Don't forget that if your housekeeper isn't a U.S. citizen, she must prove her eligibility to work in the United States.
If you're tempted to skip this process, you should know that hiring an illegal alien, of course, is…well, illegal. You can be fined and imprisoned up to five years for "felony harboring" of an illegal alien. But don’t worry…in most cases you'll only face a civil penalty. Fines range from US$250 for a first-time offender up to $10,000.
But I digress…and you wouldn't want to break the law, would you? And besides, we're just getting started! If your housekeeper doesn't have a Social Security number, she'll need to apply for one using IRS Form SS-5. Naturally, if she doesn't speak English, you (or someone fluent in her language) will need to assist her in gathering the required documents and completing the application.
Next, you'll need to register yourself as an "employer" at your state employment agency. Basically, you'll apply for Unemployment Insurance Tax Account Number and then begin making quarterly or monthly payments to the state employment agency. Of course, there's a form to submit with each payment. And as you'd expect, those failing to make the payments, or complete the form, may be severely punished.
Also, once you register as an employer, auditors can make announced or unannounced visits at any time to make certain your complying with state unemployment rules. So can representatives of the federal Occupational Health & Safety Administration (and state agencies with the same mandate), in order to enforce workplace safety rules.
Are we having fun yet? I certainly hope so, because we still have a ways to go! The next step is to register as an employer with your state revenue department. In Arizona, you can actually register as an employer for unemployment insurance purposes and for employer withholding tax purposes on a single form. But in most other states, you need to complete separate forms.
Not surprisingly, once you register, you must file quarterly or monthly forms with the state tax department, along with whatever tax you calculate must be deducted. You'll also need to file a year-end employer tax return. Once again, severe penalties apply for those tempted to ignore these requirements.
Don't forget to check local licensing requirements. You may need to apply for an employer license. In some cases, you'll discover that you won't receive a license unless your home is zoned "commercial" and not "residential." If that's the case, you won't be able to hire the housekeeper. Sorry!
Well, we're almost done! Just remember that by February 1 of each year, you need to give your housekeeper IRS Form W-2 (typed, not handwritten, please!). Don't forget to mail IRS Form W-3 to the Social Security Administration by March 1. Penalties naturally apply for failing to meet these deadlines.
By now, you may just be tempted to start scrubbing the toilets yourself. But wait! President Obama is coming to the rescue.
Last week, the White House sponsored a “Jobs Summit” to get ideas on how to create new jobs. The gathering of professional politicians, community organizers, university professors, representatives from liberal think tanks and union bosses seems certain to generate millions of new jobs. After all, private companies can no longer negotiate the maze of local, state, and federal regulations necessary to hire anyone. But fortunately, we can trust these "experts," most of whom have never been an employer, or even worked for a for-profit company.
Obama did say one thing that might be helpful. He claims he wants “fresh perspectives and new ideas” to create new jobs. Here's one: how about eliminating 90% or more of the bureaucratic maze prospective employers have to negotiate in order to actually put someone on the payroll?
Somehow, I suspect this suggestion may be omitted from the White House report to be published on the Job Summit…
Copyright © 2009 by Mark Nestmann
(An earlier version of this post was published by The Sovereign Society, https://banyanhill.com/)
