Household Employee

• A household employee comes to your home and works for you. In return, you pay her wages. She follows your instructions and uses the tools in your home. For example, you hire a nanny to pick up your child at school, walk him home, and make him a snack in your kitchen. The nanny cares for your son and prepares dinner until you return home. The nanny is your household employee. Babysitters and domestic employees are also household employees.
  
  

Childcare Center

• Teachers and caregivers at a childcare center are not your employees. They are employed by the owner of the childcare center. As a parent, you pay tuition for your child to be cared for at the center, but you do not directly pay the workers' salaries.
  
  

Exemptions

• If your household employee is your spouse, your child, or your parent, you most likely do not need to pay employment taxes. You most likely need not pay employment taxes on childcare workers, such as babysitters, who are under the age of 18. If you hired a childcare worker who does not fit these descriptions but paid the person less than $1,700 in 2011, then you do not need to pay taxes on the worker.
  
  

Taxes

• If you paid a household worker more than $1,700 in 2011, then you should withhold and pay Social Security and Medicare taxes, federal unemployment taxes, or possibly both. You are not required to withhold federal income tax from your household employee's pay, but if she asks you to, then you may.