How to Legally Pay a Housekeeper: Taxes, Forms, and Filings

To legally pay a housekeeper, you have to treat yourself as an employer once you cross a fairly low wage threshold: pay $3,000 or more in cash wages to a household employee during 2026, and you owe Social Security and Medicare taxes on those wages, need an Employer Identification Number, and must issue a W-2 and file Schedule H with your personal tax return. Federal unemployment tax kicks in at an even lower trigger. State rules pile on top. None of it is complicated once you see the pieces in order, but skipping the steps costs far more than doing them.

Is Your Housekeeper an Employee or a Contractor?

This is the first question, because everything else depends on the answer. The IRS looks at how much control you have over the work.¹ Three areas matter:

Behavioral control: whether you direct what tasks get done and how. Telling your housekeeper to scrub the bathrooms before vacuuming, or specifying which cleaning products to use, points to an employment relationship.
Financial control: whether you provide the supplies and equipment, and whether you pay by the hour or week rather than a flat fee per job.
Type of relationship: whether the arrangement is ongoing, on a regular schedule, and whether you provide any benefits.

No single factor decides it, but in practice, a housekeeper who works a recurring schedule at your home, using your supplies, is almost always your employee. If you hire through an agency that pays the worker and sends you a bill, the agency is usually the employer instead. Treating an employee as a contractor to avoid the paperwork is the single most expensive mistake in this area, because the IRS can come back for the taxes you should have paid plus penalties.

Setting Up Before the First Day

A few pieces of paperwork need to be in place before or shortly after your housekeeper starts.

Get an Employer Identification Number

You need an EIN to report wages and pay employment taxes. Apply online through the IRS — it’s free and takes minutes.² Third-party sites that charge for this are not the IRS.

Complete Form I-9

Federal law requires you to verify that your employee is authorized to work in the United States. Your housekeeper fills out their portion of Form I-9 on or before the first day of work, and you must review their original identity and work authorization documents and complete your section within three business days after their start date.³ Keep the completed form for three years after the hire date or one year after employment ends, whichever is later.⁴

Handle Form W-4 If You Agree to Withhold Income Tax

Household employers are not required to withhold federal income tax from a household employee’s wages. You only withhold if your employee asks you to and you agree.⁵ If you do, have them fill out Form W-4 so you know how much.

Report the New Hire to Your State

All employers, including household employers, must report new hires to a designated state agency within 20 days of the start date, and some states set a shorter deadline.⁶ Most states have an online portal that takes a few minutes.

The Taxes You Actually Owe

Social Security and Medicare

Once your cash wages to a household employee reach $3,000 for 2026, Social Security and Medicare taxes apply to every dollar you paid that year, including the first $3,000.⁵ The rates:

Social Security: 6.2% from the employee plus a matching 6.2% from you, on wages up to $184,500 in 2026.⁷
Medicare: 1.45% from the employee plus a matching 1.45% from you, with no wage cap.

Combined FICA comes to 15.3%, split evenly. You can either withhold the employee’s 7.65% share from each paycheck or pay it yourself. If you cover the employee’s share, those payments count as additional taxable income to the employee for income tax purposes, but not as wages for Social Security, Medicare, or unemployment calculations.⁸

Federal Unemployment Tax

If you pay $1,000 or more in total cash wages to household employees in any calendar quarter of 2026, you owe FUTA on each employee’s first $7,000 of annual wages.⁵ The nominal rate is 6%, but a credit of up to 5.4% applies if your state has an approved unemployment program, which drops the effective rate to 0.6% — about $42 per year on the full $7,000 base.⁹ FUTA is entirely your cost. Never withhold it from your employee’s pay.

State Unemployment and Workers’ Comp

Every state runs its own unemployment insurance program with its own wage base and rate; your state’s workforce or labor agency will assign a rate once you register. Some states also require household employers to carry workers’ compensation insurance covering medical bills and lost wages if your housekeeper is injured on the job. Even in states where it’s optional, a policy protects you from personal liability. Contact your state’s labor department or workers’ compensation board to confirm what applies.

Wage, Hour, and Recordkeeping Rules

Household employees are covered by the Fair Labor Standards Act. You must pay at least the federal minimum wage of $7.25 per hour, though many states and cities set higher minimums. Hours over 40 in a week require overtime at one and a half times the regular rate.

Keep records for each employee that include their full name, Social Security number, address, hours worked each week, cash wages paid each week, and any amounts claimed for room or board. FLSA records must be preserved for at least three years.¹⁰ The IRS separately requires you to keep employment tax records for at least four years after filing.¹¹

Live-In Housekeepers

If your housekeeper lives in your home, the overtime rule changes. Federal law exempts live-in domestic workers from overtime, so you don’t owe time-and-a-half for hours beyond 40 in a week.¹² You still owe at least the minimum wage for every hour worked. Tracking hours requires a written agreement about which sleeping, meal, and personal time periods are excluded, and any call to duty that interrupts one of those periods counts as work time.

Filing at Year’s End

Household employment taxes are reported annually, not quarterly like a business. You attach Schedule H (Household Employment Taxes) to your personal Form 1040 and it calculates your combined Social Security, Medicare, and FUTA obligations for the year.¹³

You also owe your employee a W-2. The standard deadline to furnish the W-2 to the employee and file Copy A with the Social Security Administration is January 31 each year.¹⁴ For the 2026 tax year, January 31, 2027, is a Sunday, so the deadline shifts to February 1, 2027.¹⁵ If you file electronically through the SSA’s W-2 Online service, the system generates the W-3 data automatically, so no separate W-3 is needed.⁵

Paying Through the Year So April Isn’t a Shock

Because household taxes settle up once a year on Schedule H, the April bill can be large. Two ways to spread it:

Adjust your own withholding. If you have a salaried job, file a new W-4 with your employer to withhold extra federal income tax. The extra offsets what you’ll owe on Schedule H.
Make quarterly estimated payments using Form 1040-ES. You can pay online through IRS Direct Pay or your IRS Online Account.¹⁶

What It Costs to Skip This

Ignoring household employment taxes doesn’t make them disappear. It makes the eventual bill larger and adds penalties on top.

If you treat your housekeeper as an independent contractor when the IRS considers them an employee, you can be held liable for all the employment taxes you should have paid, including the employee’s share of FICA that was never withheld. The IRS may also assess penalties under Section 3509 of the tax code, and those percentages are higher if you never filed the required information returns.¹

Filing and payment penalties stack:

Failure to file: 5% of the unpaid tax per month, up to 25%. If the return is more than 60 days late, the minimum penalty is $525 or 100% of the tax owed, whichever is less.
Failure to pay: 0.5% of the unpaid tax per month, up to 25%.
Interest accrues daily on unpaid balances at the federal short-term rate plus 3%.

These apply per form, so a late W-2 filing carries its own penalty on top of a late Schedule H.¹⁷ And beyond the IRS, failing to carry required workers’ compensation coverage or pay state unemployment taxes can trigger state fines and personal liability for medical costs if your housekeeper is hurt on the job.

1
Internal Revenue Service. Independent Contractor (Self-Employed) or Employee?
2
Internal Revenue Service. Get an Employer Identification Number
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U.S. Citizenship and Immigration Services. Completing Section 2, Employer Review and Attestation
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USCIS. 10.0 Retaining Form I-9
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Internal Revenue Service. Publication 926 (2026), Household Employer’s Tax Guide
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Administration for Children and Families. New Hire Reporting
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Social Security Administration. Contribution and Benefit Base
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Internal Revenue Service. 2025 Instructions for Schedule H – Household Employment Taxes
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Internal Revenue Service. Topic No. 756, Employment Taxes for Household Employees
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eCFR. 29 CFR 552.110 – Recordkeeping Requirements
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Internal Revenue Service. Employment Tax Recordkeeping
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eCFR. 29 CFR 552.102 – Live-In Domestic Service Employees
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Internal Revenue Service. 2025 Schedule H (Form 1040) Household Employment Taxes
14
Social Security Administration. Deadline Dates to File W-2s
15
Internal Revenue Service. 2026 General Instructions for Forms W-2 and W-3
16
Internal Revenue Service. Estimated Taxes
17
Internal Revenue Service. Topic No. 653, IRS Notices and Bills, Penalties and Interest Charges