While many family members pay minors to do domestic chores, it is a little known fact that household work is earned income even if the employer is related to the child. While parent-employed minors have the most IRS exceptions, there are ways for young children to be employed doing common domestic work for individuals other than their parents.
While navigating the rules may be trickier, your child can still enjoy easy domestic employment even when someone else is the employer.
This article covers the most common topics of concern: child labor laws, minimum wage, payroll taxes, tax withholding, and tax return reporting. Employers are subject to rules at the federal, state, and sometimes even local level. As I live in Virginia, I have included references to relevant Virginia state rules.
Children can perform minor chores around a private home at any age.
Child Labor Laws
Children are allowed to “work for a business owned entirely by your parents as long as it is not in mining, manufacturing, or any of the 17 hazardous occupations” at any age. In this way, parent-employed minors are afforded the most flexibility in what jobs they would like to get.
However, if the business is not owned entirely by your parents, then child labor laws apply. You need to meet the labor laws at both the federal and state level.
Federal Child Labor Laws
At the federal level, the Department of Labor states:
What is the youngest age at which a person can be employed?
The Fair Labor Standards Act (FLSA) sets 14 as the minimum age for most non-agricultural work. However, at any age, youth may deliver newspapers; perform in radio, television, movie, or theatrical productions; work in businesses owned by their parents (except in mining, manufacturing or hazardous jobs); and perform babysitting or perform minor chores around a private home. Also, at any age, youth may be employed as homeworkers to gather evergreens and make evergreen wreaths.
The “perform babysitting or perform minor chores around a private home” is the relevant section. Under federal child labor laws, children can be employed as a basic household employees by anyone at any age.
Virginia State Child Labor Laws
16VAC15-30-210. Employment of minors under age 14.
Minors under 14 years of age may not be employed in any occupation except the following:
- Bootblacks, caddies, selling newspapers, magazines, periodicals or circulars, running errands or delivering parcels or messages where none of the duties are to be performed inside any commercial establishment and are under the direction and supervision of an employer.
- Distributing newspapers on regularly established routes.
- Farms, gardens and orchards.
- Domestic duties in and around private homes.
- On school playgrounds or playgrounds operated by the state, city, county or by a corporation the property of which is tax exempt.
- For one day or less in connection with their studies at any public or accredited private school.
- Employed by their parents in any occupation other than manufacturing, or mining, or an occupation declared hazardous by the Commissioner of Labor and Industry.
Because household employment is “domestic duties in and around private homes,” this means that children can be employed in this way by anyone at any age.
Virginia Child Working Papers
1. A child engaged in domestic work when such work is performed in connection with the child’s own home and directly for his parent or a person standing in place of his parent;
2. A child employed in occasional work performed outside school hours where such work is in connection with the employer’s home but not in connection with the employer’s business, trade, or profession;
3. A child 12 or 13 years of age employed outside school hours on farms, in orchards or in gardens with the consent of his parent or a person standing in place of his parent;
4. A child between the ages of 12 and 18 employed as a page or clerk for either the House of Delegates or the Senate of Virginia;
5. A child participating in the activities of a volunteer emergency medical services agency;
6. A child under 16 years of age employed by his parent in an occupation other than manufacturing; or
7. A child 12 years of age or older employed by an eleemosynary organization or unit of state or local government as a referee for sports programs sponsored by that eleemosynary, state, or local organization or by an organization of referees sponsored by an organization recognized by the United States Olympic Committee under 36 U.S.C. § 220522.
B. Nothing in this chapter, except §§ 40.1-100.1 , 40.1-100.2 , and 40.1-103 , shall be construed to apply to a child employed by his parent or a person standing in place of his parent on farms, in orchards or in gardens owned or operated by such parent or person.
Because household employment is “a child employed in occasional work performed outside school hours where such work is in connection with the employer’s home but not in connection with the employer’s business, trade, or profession,” this means that children can be employed as a basic household employee without working papers.
Children under age 14 performing minor chores around private homes are not subject to minimum wage laws.
In the United States, both the state and federal governments have rules in place that set a minimum hourly wage that must be paid. While some specific employees, jobs, or employers are exempt from the minimum wage requirements, most employers are subjected to these laws. Even if you pay a wage via other means (salary plus tips, per-piece pay, etc.), for salaries subject to minimum wage laws, employers are still required to track an employee’s hours and verify that the alternative compensation resulted in a wage higher than the minimum.
There is much debate about whether minimum wage laws help or hurt the disadvantaged. However, in the case of a very young child, it is clear that a minimum hourly wage isn’t a great fit. Very young children are just learning everything for the first time. As we write in “Raising the Minimum Wage Hurts The Most Disadvantaged“:
To understand why minimum wage hurts the most disadvantaged, you must imagine the person who is having trouble getting hired at a job paying $7 per hour or higher. They may not have had a job ever or have had one only in the past year. Their communication skills may not be adequate or they may not be fluent in the language. They may not have finished basic schooling. They may not have learned to follow instructions, show up on time, or diligently complete tasks they don’t like.
We did not write that paragraph about elementary school children, but elementary school children are accurately described by that paragraph.
Federal Minimum Wage
On a federal level, the federal minimum wage laws only apply to employees covered by FLSA. As the Department of Labor summarizes, “The FLSA is the Federal law which sets minimum wage , overtime , recordkeeping , and youth employment standards .” While “domestic service workers (such as housekeepers, full-time babysitters, and cooks) are normally covered by the law,” there is an exception for children under age 14 performing minor chores around private homes.
The DOL summarizes:
Under 14 – Children under 14 years of age may not be employed in non-agricultural occupations covered by the FLSA. Permissible employment for such children is limited to work that is exempt from the FLSA (such as delivering newspapers to the consumer and acting). Children may also perform work not covered by the FLSA such as completing minor chores around private homes or casual baby-sitting.
In this way, very young minor children are allowed to complete minor chores around private homes without being subject to the federal minimum wage laws of the FLSA.
State Minimum Wage
For the purposes of Virginia’s minimum wage law, § 40.1-28.9 states:
A. As used in this article:
“Employee” includes any individual employed by an employer. “Employee” includes a home care provider. “Employee” does not include the following:
5. Any person under the age of 18 in the employ of his parent or legal guardian;
8. Any person under the age of 16, regardless of by whom employed;
11. Any person who is less than 18 years of age and who is currently enrolled on a full-time basis in any secondary school, institution of higher education, or trade school, provided that the person is not employed more than 20 hours per week;
13. Any person who works as a babysitter for fewer than 10 hours per week;
In this way, minors under the age of 16 do not count as employees for the purpose of Virginia minimum wage laws and thus are not subject to VA minimum wage regardless of by whom they are employed.
Note: If your employee’s wages are subject to state minimum wage laws, there may be yet other requirements made by your state, such as the display of posters .
If you pay more than $1,000 to household employees who are not your child, then you are subject to some payroll taxes.
Payroll Taxes and Withholding
In the United States, employers are responsible for paying the government a percentage of each employee’s pay to pay for Medicare, Social Security, and federal or state-funded insurance programs such as unemployment, disability, or even long-term-care insurance. These taxes are called payroll taxes because, rather than being paid on your tax return, your employer pays them on your behalf.
FICA Taxes: Social Security and Medicare
According to Publication 926, Household Employer’s Tax Guide , you need to withhold Social Security and Medicare taxes if you pay more than $2,300 in 2021 to any one household employee. When counting wages paid though, you are not supposed to count wages you paid to “An employee who is under the age of 18 at any time during the year. Exception: Count these wages if providing household services is the employee’s principal occupation. If the employee is a student, providing household services isn’t considered to be his or her principal occupation.”
In this way, most household employees under age 18 do not owe Social Security and Medicare taxes even if a non-parent is their employer.
Federal Unemployment Tax (FUTA)
According to Publication 926, Household Employer’s Tax Guide , “The federal unemployment tax is part of the federal and state program under the Federal Unemployment Tax Act (FUTA) that pays unemployment compensation to workers who lose their jobs. Like most employers, you may owe both the federal unemployment tax (the FUTA tax) and a state unemployment tax.”
Also from the same publications: If you “pay total cash wages of $1,000 or more in any calendar quarter of 2021 or 2022 to household employees ,” then you need to pay FUTA.
For FUTA, the exceptions are:
Wages not counted.
Don’t count wages you pay to any of the following individuals as FUTA wages.
- Your spouse.
- Your child who is under the age of 21.
- Your parent.
While minors employed by their parents are exempt, minors employed by extended family or others are not exempt. So household employee wages need to be under $1,000 for the year to avoid FUTA taxation.
State Unemployment or Other Local Payroll Taxes
There are also state payroll taxes to consider.
Here in Virginia, there is a state unemployment insurance tax. Virginia Employment Commission makes clear:
I have a domestic employee in my home. Do I need to pay unemployment tax on these wages?
This will depend on the amount of wages that you pay during a calendar quarter. You will be liable for state unemployment taxes if the total amount of wages you pay for domestic services in a calendar quarter equals or exceeds $1,000. …
The Virginia code § 60.2-219 reiterates this point, stating that for the purposes of unemployment compensation and taxation:
The term “employment” shall not include:
…7. Service performed by an individual in the employ of his son, daughter, or spouse and service performed by a child under the age of 21 in the employ of his father or mother;
4. Domestic service in a private home, local college club or local chapter of a college fraternity or sorority except as provided for in § 60.2-215 ;
where 60.2.215 states:
“Employment” includes domestic service performed by an individual in a private home, local college club or local chapter of a college fraternity or sorority for a person who paid wages of $1,000 or more to individuals employed in such domestic service in any calendar quarter in the current calendar year or the preceding calendar year.
In this way, while parent-employed minors are exempt from state unemployment insurance tax, minors employed by extended family or others are not exempt. So household employee wages need to be under $1,000 for the year to avoid state unemployment taxation.
The child or guardian can simply request no tax withholding.
The United States also has the requirement that you pre-pay the tax you are likely to owe in the form of either tax withholding or estimated tax payments. Employees may elect to have withholding set on their earnings so that they can avoid the hassle of estimated tax payments. For a minor who is unlikely to earn enough money to even owe tax though, neither withholding nor estimated tax payments will help.
Federal Tax Withholding
According to Publication 926, Household Employer’s Tax Guide ,
You’re not required to withhold federal income tax from wages you pay a household employee. You should withhold federal income tax only if your household employee asks you to withhold it and you agree. The employee must give you a completed Form W-4.
As the parent’s guardian, you get to decide whether you would like income tax withheld. By default, I would suggest that you do not.
State Tax Withholding
Virginia has a whole section of their withholding documentation entitled “Household Employer (Nanny Tax) .” In this section, Virginia Tax writes:
Basic Instructions for Household Employers
Before you begin, make sure you are liable to withhold Virginia income tax from the wages of your household employee(s). If the wages are not subject to federal withholding, they are not subject to Virginia withholding.
In this way, if you decide you do not want federal tax withheld, then you also do not need to have Virginia tax withheld.
If you pay more than $1,000 to household employees who are not your child, then you may need to file Schedule H with your return.
Tax Return Filing
Anyone with a household employee may be required to file a Schedule H with their tax return in order to pay the employees FICA taxes. If the non-parent employer pays the child A) more than $2,300 in 2021, B) you withheld federal income tax, or C) you paid more than $1,000 in any quarter, then you need to file Schedule H along with your taxes.
Separately, the child employee may also be required to file a tax return to report their income. They are subject to the same filing requirements as any other income-earning person. You can read about those rules in “Do Children Need To File A Tax Return To Fund Their Roth IRA? (2020)”
While not all jobs or income levels are exempt from hassle, you can see how basic domestic employment doing household chores is easy for a minor and his or her employer to manage.
Photo by Nikoline Arns on Unsplash