The following information has been prepared to answer questions most frequently asked by host families concerning tax issues and hosting an au pair.
Q. Is withholding of Social Security tax required on the weekly stipend paid to each au pair?
A. No. The Internal Revenue Code states "Services performed by a non-resident-alien while temporarily in the United States as a non-resident under subparagraph (J) of Section 101(a)(15) of the Immigration and Nationality Act are excluded from coverage under the Social Security Program if the services are performed to carry out the purpose for which the non-resident alien was admitted to the United States."
Q. Are the payments to the au pairs taxable to them and is Federal withholding required?
A. While the weekly wages given to the au pair is not subject to Social Security and Medicare taxes, it is taxable to the au pair as wages.
Because the maximum tax burden for most au pairs will be less than $1,000, there is no need for the au pair to make quarterly estimated payments. Federal withholding is not required unless the "employee" (au pair) asks the "employer" (host family) to withhold Federal income tax and the "employer" agrees to do so.
Q. Does my family need to issue a W-2 form to our au pair?
A. No. Because au pair wages are paid for domestic service in a private home, they are not subject to mandatory U.S. income tax withholding and reporting on Forms 941 (PDF) and W-2. However, au pair wages are includible in the gross income of the recipients, and au pairs are required to file U.S. individual income tax returns.
Q. Does the weekly stipend payment to each au pair represent a qualifying child-care expense to the host family?
A. Au Pair in America believes that it does; however, a host family is advised to verify their particular situation with their tax advisor. To claim the Child and Dependent Care Tax Credit for the au pair stipend, the host family will need to provide the au pair’s social security number.
Q. Does the fee paid by the host family to Au Pair in America qualify as a child-care expense?
A. Au Pair in America advises Host Families to discuss this issue with their tax advisor and obtain an opinion.
Q. What is Au Pair in America’s tax ID number?
A. The tax ID number is 31-0683821.
Q. Is Schedule H (Form 1040) required to be filed by the host family?
A. Since payments to the au pair are not considered wages for the purpose of Social Security Taxes, Medicare Taxes or Federal Unemployment Taxes, and since the host family is not required to withhold Federal Income Tax, Schedule H is not required to be filed.
Q. What effect do the IRS reporting requirements have on the Au Pair program?
A. Host Families who wish to take the child care credit on their Federal Income Tax Return or obtain reimbursement from an employer-sponsored, flexible spending account for the weekly pocket money paid to the au pair must have a Social Security number for their au pair.
Q. How can my au pair obtain a Social Security card?
A. Your au pair may apply at your local social security office for a “work only with DHS authorization” social security card. The purpose of this card is for employment authorization under the terms of the au pair regulations. Your au pair can apply for her social security card four days after arriving in the United States.
To obtain the social security card, your au pair will need a valid passport containing her J-1 visa. She will need to bring her I-94 card print-out, which she can access from www.cbp.gov/I94. She will also need her DS-2019 form and proof of identification that is at least one year old (passport or driver’s license). If your au pair does not have an identification that is at least one year old, a certified copy of her birth certificate will suffice.
If there is a discrepancy with information, the social security office may deny the au pair a social security card and would request a manual verification of data, which would take additional time. If the social security office says that they cannot issue a social security card and returns the application and documents, please call Evelyn Blum at Au Pair in America, (800) 928 -7247, ext. 5027, or email email@example.com for further assistance.
Q. What is the I-9 form and why is it important?
A. The Department of State requires that all host families participating in an authorized au pair program complete and retain the I-9 “Employment Eligibility Verification” form issued by the Department of Justice, Immigration and Naturalization Services for each au pair. You may request a copy of this form by calling your community counselor.
Q. Is there an IRS website that gives specific details on taxes for au pairs?
A. The following is an IRS website that many host families find useful. Au Pair in
America is not responsible for its contents.
Q. Am I required to purchase Worker’s Compensation Insurance for my au pair?
A. This depends on the laws of your state. You should pose this question to your insurance advisor and/or attorney. The program regulations of Au Pair in America do not require this coverage. Some states, like Massachusetts, exempt child care providers from the requirement of Worker’s Compensation coverage. Other states require coverage if quarterly earnings exceed a certain amount.
Finally, as noted above, all these issues should be discussed with and confirmed by a host family's tax advisor.
I really feel like I have a family in America after being an au pair. My host family is going to visit me and my family in Sweden this winter and I cannot wait to see them!Sandra, au pair