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University of Massachusetts Amherst

Family Business Center

Is It Easier to Clean the Pool or Hire Someone to Do It?

By: Jenelle C. Dodds, Esq.

Lawns, pools, children out of school - we all have something that requires a little extra help this time of year. Hiring someone to help around your house or with an elderly relative may make things easier, but failing to withhold taxes when the law requires it is probably going make your life more difficult.

If you are a household employer paying someone to perform services for you at home, you will be responsible for paying certain taxes if the person you are paying is your employee. A household employer must (1) pay Social Security and Medicare taxes if he or she pays the household employee more than $1,500 in wages in a year and (2) pay state and federal unemployment taxes if he or she pays more than $1,000 in wages to all household employees in any quarter. In addition, Massachusetts requires workers’ compensation insurance coverage for any employee who works at least 16 hours a week.

The first question you must answer is whether you are employing an employee or hiring an independent contractor. The test for an employer/employee relationship is not how often someone works or how they get paid; instead it is whether you control both what work is done and the how the work is done. If you are controlling the services and the details of how the services are performed, the person doing the work is your employee even if they are part time or paid by the job. Even a worker you hired through an agency is considered your employee if you and not the agency control how the work is done and if you pay the employee and not the agency. On the other hand, workers who control how they do work for you are self-employed and you are not required to withhold or pay household employment taxes for them. Generally, you must report payments to independent contractors by providing them with an IRS Form 1099.

In addition you are “controlling” the work if you provide all the tools, supplies, or other requirements necessary for the job. For example, if you pay Steve to clean your house, water your plants, and walk the dog while you are at work and you provide specific instructions on how and when to perform those tasks and the cleaners and dog food, Steve is your household employee. On the other hand if you pay Sue to maintain your pool and she provides the pool chemicals, services other pools in your neighborhood, and hires her own replacement when she is out of town, Sue is not your household employee.

Jenelle C. Dodds is an attorney in the Business & Finance Department at Bulkley, Richardson and Gelinas, LLP in Springfield, where she focuses on general corporate and business matters. Her email address is jdodds@bulkley.com.

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