Household employees include housekeepers, maids, babysitters, gardeners, and others who perform household work in or around your private residence as your employee. Repairmen, plumbers, contractors and other business people who provide their services as independent contractors are not your employees. In Texas, if you pay a household employee such as a nanny, babysitter, caregiver or house manager more than $2,700 a year or $1,000 in a quarter to perform work in your home (or occasionally even out of your home such as in a nanny share), you are a household employer.
How to Start
Before your employee begins to work, you need to fill out Form I-9 to verify they’re eligible to work in the U.S. The I-9 does not get sent to any government agency but must be presented to authorities if your nanny or senior caregiver’s employment eligibility is ever questioned.
You must first apply for a EIN (Employee Identification Number) with the IRS. This will be used as your unique ID with both state and federal tax authorities. Then you can open an account with your state taxing authority.
Household employers in Texas are not required to carry a workers’ compensation insurance policy, however we recommend doing so. These policies pay for medical expenses and lost wages if an employee has a work-related injury or illness.
During employment
File state employment tax returns throughout the year and remit state employer and employee taxes.
Remit federal employer and employee taxes via 1040-ES estimated tax payment voucher four times each year.
Each year end, prepare Schedule H and file with Form 1040; prepare and distribute Form W-2 to each employee; file Form W-2 Copy A/Form W-3 with the Social Security Administration (SSA).
Manage ongoing alerts and notices from the state (tax rates and labor law is subject to change at any time.
The current minimum wage in Texas is $7.25/hour.
Texas overtime requirements
Live-out employees must be paid 1.5x their hourly rate for all hours worked over 40 in a workweek.
Live-in employees are not required to be paid overtime.
Overtime is not required to be paid when work is performed on a holiday.
Optional benefits for your employee
Health insurance
Families with only 1 employee can make contributions toward their employee’s health insurance premiums and treat the amount as non-taxable compensation. In this scenario, neither the employee nor the employer are required to pay any taxes on that portion of the compensation. Families with 2 or more employees have 3 options:
Set up an Individual Coverage Health Reimbursement Arrangement (ICHRA).
Set up a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA).
Purchase a policy through SHOP (Small Business Health Options Program).
Mileage reimbursements
The current federal mileage reimbursement rate is 67 cents per mile and only covers miles driven by your employee while on the job. Miles driven commuting are not eligible for reimbursement.
Ending employment
Texas household employers do not need to pay their employees for unused vacation and/or sick time unless their employment contract specifies otherwise.
Close down your state employment tax account(s)
The state tax agencies expect you to file timely returns for as long as your tax accounts are open — even to report $0 in wages paid.
Maintain payroll records
Household employers are required to keep wage records on file for at least three years.
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