I thought this was relatively simple, but as is usually the case, the problems are in the details.
Client hired a nanny. Thought they would hit the $1,900 threshold, so started withholding Social Security and Medicare. Earnings got up to $1,500, and the employee quit. My research leads me to believe that the client can reimburse the withheld social security and medicare, but they appear to still owe Federal Unemployment, and state unemployment..
My research also leads me to believe that a household employer only needs to issue W-2s if the social security wages are in excess of $1,900. That doesn't make sense to me. Shouldn't the employee receive a W-2 showing $1,500 of wages, and showing zero in the social security and medicare boxes? The employee obviously isn't an independent contractor, so a 1099 isn't appropriate. How does the $1,500 of wages get reported?
Has anyone encountered this before that can point me in the right direction on this? I appreciate any insight anyone can give.
Ken Weber
Vancouver, WA