Employees providing domestic or household services for an employer may be exempt from paying certain federal and state taxes that are normally paid by employers and employees. These exemptions are based on the employee’s student status, age, or family relationship with the employer. These exemptions are NOT optional. This means that wages that are through this employment agreement may not be used or counted by social security for the purposes of earning future benefits. This can impact retirement, disability, and survivor benefit amounts. To learn more about social security programs, please visit www.ssa.gov or call 1-800-772-1213. This also means that wages paid through this employment agreement may not qualify for unemployment benefits.
Morning Sun Financial Services determines the relationship between the employee and employer through the “Employment Tax Information Questionnaire” and follows the IRS Publication 926 “Household Employer’s Tax Guide” when applying these exemptions. Please note that Morning Sun Financial Services is unable to provide tax advice and encourages employees and employers to consult professional tax consultants with questions.
| Employee/Employer Relationship |
Social Security/Medicare FICA |
Federal Unemployment FUTA |
State Unemployment SUTA (South Carolina) |
| Employee is the spouse of the employer |
Exempt |
Exempt |
Exempt |
| Employee is a parent of the employer |
Exempt |
Exempt |
Exempt |
| Employee is a child of the employer and under 21 |
Exempt *Taxable after 21st birthday |
Exempt *Taxable after 21st birthday |
Exempt *Taxable after 18th birthday |
| Employee who was under the age of 18 at any time during the year |
Exempt |
Taxable |
Exempt *Taxable after 18th birthday |
| Foreign student in US on a VISA for the purpose of providing domestic services. |
Exempt |
Exempt |
Taxable |
Employee is the spouse of the employer – If an employee is the spouse of their employer, both employee and employer are exempt from paying Social Security and Medicare (FICA). The employer is exempt from paying Federal unemployment (FUTA) and state unemployment (SUTA) taxes.
Employee is a parent of the employer – If an employee is the parent of their employer, both employee and employer are exempt from paying Social Security and Medicare (FICA). The employer is exempt from paying Federal unemployment (FUTA) and state unemployment (SUTA) taxes.
* Wages are counted as Social Security and Medicare (FICA) taxable if the employee is the parent of their employer and both of the following conditions apply:
- a) The employee cares for the employer’s child who is either of the following:
- i. Under the age of 18.
- ii. Has a physical or mental condition that requires the personal care of an adult for at least 4 continuous weeks in the calendar quarter services were performed.
- b) The employer’s martial status is one of the following:
- i. Employer is divorced and has not remarried.
- ii. Employer is a widow or widower.
- iii. Employer is living with a spouse whose physical or mental condition precents them from caring for their child for at least 4 continuous weeks in the calendar quarter services were performed.
Employee is a child of the employer and under 21 years old – If the employee is a child of the employer and under 21 years of age, both employee and employer are exempt from paying Social Security and Medicare (FICA). The employer is exempt from paying Federal unemployment (FUTA) until the child’s 21st birthday. The employer is exempt from paying South Carolina State unemployment until the child’s 18th birthday.
Employee who was under the age of 18 at any time during the year – If the employee was under the age of 18 or turned 18 during the calendar year and is a student (providing household services is not their principal occupation), both employee and employer are exempt from paying Social Security and Medicare (FICA). If the employee is not a child of the employer, the employer is required to pay South Carolina State unemployment (SUTA) taxes.
Foreign student in the US for the purpose of providing domestic services currently on an F-visa, J-visa, M-visa, or Q-visa – If an employee is a non-resident student in the United States for the purpose of providing domestic services on an F-1, J-1, M-1, or Q-1 visa, both employee and employer are exempt from paying Social Security and Medicare (FICA). The employer is exempt from paying Federal unemployment (FUTA) but is required to pay South Carolina State unemployment (SUTA).