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HOUSEHOLD HELP AND THE IRS

 ROCHESTER, N.Y., Feb. 10 /PRNewswire/ -- Hate housekeeping? If you're thinking of hiring help, you better think twice before paying workers under the table.
 Thanks to President Clinton's continued search for Attorney General, the American public has received quite an education on the do's and don'ts of household employees. And not just in terms of ethics, but on the implications of payroll and payroll tax issues.
 Generally, household work includes services performed in or about your private home by cooks, butlers, housekeepers, governesses, maids, cleaning people, babysitters, janitors, caretakers, handy persons, gardeners and drivers of family cars for family use.
 And household employees are subject to social security and Medicare taxes if you pay them cash wages of $50 or more in a calendar quarter - taxes which you, as the employer, are liable for.
 Paychex, Inc., a national payroll processing company based in Rochester, N.Y., processes payrolls for approximately 675 clients who have domestic help - that's .4 percent of their total client base of 160,000 small businesses. How does that fit in the big picture? IRS projections estimate that only 1 percent of the U.S. households report domestic help.
 "Even if you have one employee and that employee is domestic help, you are required to pay payroll taxes," said Gene Polisseni, vice president of marketing for Paychex, Inc.
 Here are just some of the regulations for household workers:
 -- First are federal withholding taxes. While income tax withholding from household workers is optional, their wages are taxable for Social Security and Medicare if they are paid $50 or more in cash in a quarter; and taxable for Federal unemployment tax if the employer paid cash wages of $1,000 or more for domestic service in any calendar quarter in the current or preceding year.
 -- Applicable state tax, according to state law.
 -- Filing form 942, Employer's Quarterly Tax Return for Household Employees. This includes not only filing the information return, but paying appropriate FICA and Federal withholding taxes for the quarter.
 -- Supplying Form W-2 (Wage and Tax Statement) to employees at the end of the year.
 "Be careful in how you define your help," Polisseni cautions. "Is your caretaker a domestic employee or an independent contractor? The IRS tax regulations are different for each classification."
 -0- 2/10/93
 /CONTACT: Kelly Ketchel Brown of Paychex, Inc., 716-383-3153/


CO: Paychex, Inc. ST: New York IN: SU:

BM -- CL002 -- 4968 02/10/93 07:34 EST
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Publication:PR Newswire
Date:Feb 10, 1993
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