Am I a household employer?
Hiring someone to help care for an aging parent at home is one of the most common ways a family quietly becomes a household employer — and many people don't realize it until tax season. The good news: figuring out whether the rules apply to you usually comes down to a few plain-English questions. Here's how to tell, and what generally follows if the answer is yes.
The test: do you control the work?
Whether someone is a household employee usually comes down to control. If your family decides what the caregiver does and how they do it — the schedule, the tasks, the way care is delivered — the IRS generally treats that person as a household employee rather than an independent contractor. Most caregivers a family finds and hires directly land on the employee side of that line.
The contrast is a worker who runs their own business: sets their own hours, offers services to the public, and controls how the job gets done. A caregiver placed and supervised by an agency is usually the agency's employee, not yours. If you hired directly and you set the terms, the household-employer rules are the ones to read — though borderline cases are worth confirming with a tax advisor.
The wage threshold that triggers taxes
Paying a household employee doesn't automatically create a tax bill — it depends on how much you pay over the year. Once cash wages to one caregiver reach about $3,000 in a year, Social Security and Medicare taxes (together, FICA) generally come into play, with the employer matching what's withheld from the caregiver's pay. Below that amount FICA usually doesn't apply, though it's worth tracking as you go.
Federal unemployment tax (FUTA) is a separate test, generally tied to how much you pay in a single calendar quarter rather than the yearly total — so it can apply in some situations even when the FICA threshold isn't met. Several states layer on their own thresholds and filings as well. Where you land depends on your numbers and your state, so treat these as general rules and confirm the specifics with a tax advisor.
What that means in practice
If the rules apply, paying on the books generally involves a handful of steps: get an Employer Identification Number (EIN) for whoever is the employer, withhold the caregiver's share of FICA from each paycheck while matching it as the employer, and keep clear records of what you paid and when.
At year-end, household employment taxes are usually reported on Schedule H, filed with the employer's Form 1040 — there's typically no separate business-style quarterly return. You also give the caregiver a W-2 so they can file their own taxes. One detail that trips families up: when you arrange care for a parent, your parent is usually the legal employer, so the EIN, Schedule H, and W-2 generally go under their name even if you handle everything. Confirm whose name applies to your situation with a tax advisor.
Where KinPayroll fits
KinPayroll is built around exactly this situation — a family paying an in-home caregiver for an aging parent. It tracks every payment as you go, so you can see when you cross the threshold instead of guessing, and it sets your parent up as the employer where that's the right call.
At year-end it generates the Schedule H and the caregiver's W-2 from the wages you've already logged, so most of the paperwork is done before you sit down to file. Not sure you've crossed the threshold yet? Start on the free tier and let it track each payment until you do.
This guide is general information, not tax or legal advice. Tax and Medicaid outcomes depend on your specific situation and your state's rules — confirm with a qualified tax advisor or elder-law professional before acting.