Eau Claire, WI asked in Employment Law and Tax Law for Wisconsin

Q: I live with stepson. He pays me to care for him. He still takes out medicare tax and FICA Tax. As a parent should he?

His mother my wife doesn't have any medicare or FICA taken out. Which Internal Revenue Code contains a “family employment exception”, which applies to service in a private home “in the employ of an individual’s son, daughter, or spouse”. In those cases, according to the IRS, no actual employment relationship exists does this include step parents?

Another post from IRS Site...These services may or may not be provided by a family member. If the caregiver employee is a family member, the employer may not owe employment taxes even though the employer needs to report the caregiver's compensation on a Form W-2. See Publication 926, Household Employer's Tax Guide for more information

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1 Lawyer Answer
Eric Steven Day
Eric Steven Day
Answered
  • Tax Law Lawyer
  • Henderson, NV

A: If he is paying you a wage as an employee, or providing you with a W-2, then he should withhold employment taxes from your wage. You, the employee, with pay half (about 7.7%) and he, the employer, will pay the other half. If he is paying you as an independent contractor, then he is not responsible for the medicare and FICA tax to come out of your pay. This would be your responsibility and likely be taken care of when you file your Schedule C on your Personal Tax Return. There are some jobs that are exempt from withholding, the most relevant is a minister, but if you don't pay into the system, you cannot collect from the system in retirement. I am not sure why your wife is not paying in, but she should be unless she is exempt somehow.

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