Independent employees can be paperwork nightmare

Thousands of people hire independent workers so they can recapture their free time. The problem occurs when the convenience becomes a nuisance during tax season.

According to the Internal Revenue Service, a household worker (maid, baby-sitter, nanny, health aide, private nurse or yard worker), is considered an employee if the payer controls what and how work is done and provides the supplies necessary to get the task completed.

The 2000 Household Employment Tax Guide says, with some exclusions, that anyone who pay wages of $1,200 or more to any one household employee must withhold and pay Social Security and Medicare taxes. Anyone who paid cash wages of $1,000 or more in any quarter during this year or a previous year to a household employee must pay federal unemployment tax.

The IRS offers the following tips:

Keep wage and tax records

On each payday, record the date and amounts of: the employee's cash and non-cash wages; any Social Security or Medicare tax withheld or to be paid on behalf of the employee by agreement; any federal income tax withheld; any advance earned income credit payments made; any state employment taxes withheld.

Get an Employer Identification Number

File the appropriate forms

Be aware of the law.

(The preceding article was provided by Lois Groover of The Maids International.)