Workers in Your Home and Social Security

By Megan Forristall
Social Security Public Affairs Specialist in Peru, IL

Do you plan to pay a cleaning person, cook, gardener, babysitter, or other household worker at least $2,300 in 2021? This amount includes any cash you pay for your household employee’s transportation, meals, and housing. If you will pay at least $2,300 to one person, you have some additional financial responsibilities.

When you pay at least $2,300 in wages to a household worker, you must do all of the following:

• Deduct Social Security and Medicare taxes from those wages.
• Pay these taxes to the Internal Revenue Service.
• Report the wages to Social Security.

For every $2,300 in wages, most household employees earn credits toward Social Security benefits and Medicare coverage. Generally, people need 10 years of work to qualify for:

• Retirement benefits (as early as age 62).
• Disability benefits for the worker and the worker’s dependents.
• Survivors benefits for the worker’s family.
• Medicare benefits.

You can learn more about reporting household worker income by reading Household Workers at www.ssa.gov/pubs/EN-05-10021.pdf.

The Planning Center, is a fee-only financial planning and wealth management firm. Email us at clientservices@theplanningcenter.com.