Tax Information for au pairs
I know how confusing taxes can be and I want to help make the process as simple as possible. Because I’m not certified tax advisor, I can’t instruct you on exactly how to fill out your tax forms, but I can provide you with some helpful information.
What are the au pairs responsibilities?
The U.S. Internal Revenue Service (IRS) considers au pairs to be “employees” of the host family for tax reasons, even though in the United States on a “cultural exchange” visa. Therefore, the weekly au pair stipend is subject to U.S. income taxes. Au pairs are responsible for declaring their own income, submitting a tax return and paying taxes if necessary.
In order to file income taxes in the U.S., you need to have either a social security number or an Individual Taxpayer Identification Number (“ITIN”).
How much do au pairs have to pay?
Au pairs are allowed to claim a personal exemption for themselves, but are not eligible for the standard deduction in their tax filing. Au pairs are not considered “students” by the IRS so they are also not eligible to exclude au pair wages from gross income under the student article of any U.S. income tax treaty.
We recommend for the au pair to set aside 10 to 15 USD per week to cover any taxes you might owe.
Where can au pairs and host families get help?
- The IRS website (irs.gov/Individuals/International-Taxpayers/Au-Pairs) has the most recent and only official information about au pairs and taxes.
- IRS Help number: 1-800-829-1040 within the US, and +1-267-941-1000 outside the US.
- IRS Chat function helps to direct you on their webpage.
- Download our Tax information for au pairs guide.
- If additional information is needed, we advise host families and au pairs to speak with a local professional tax advisor or directly with the IRS.
When do au pairs need to file taxes?
By April 18, 2018 the au pair should file form 1040NR-EZ to report her/his au pair stipend for the previous calendar year.
HOW TO SUBMIT THE FORM?
To mail: Please see the 3rd page of “Instructions for Form 1040NR-EZ” under “Where To File”.
For E-File options: https://www.irs.gov/filing/e-file-options
HOST FAMILY TAXES
Child and Dependent Care Tax Credit
As long as you have used the au pair’s child care services in order to work or look for employment, the stipend paid to your au pair, the costs of room and board and the program fees paid to Cultural Care Au Pair are all eligible under the Child and Dependent Care Tax Credit. Cultural Care’s federal tax ID number is 20-2020345.
Dependent Care Reimbursement Programs
The eligibility requirements for these programs (often called “Flex-Spending Accounts” or “FSAs”) are usually identical to those for the Child and Dependent Care Tax Credit.
Please note that expense paid for using Dependent Care Reimbursement Program funds are not also eligible for the Child and Dependent Care Tax Credit.
Flex-Spending Account paperwork
Cultural Care Au Pair is happy to provide host families with a summary statement of payments received during a tax year. We are also able to sign and complete most forms that your plan might require for reimbursement.
Please note, however, that we are only able to provide either the total amount paid in a given calendar year, or the amount paid in a given calendar year with the dates of the applicable full au pair term of service (e.g. one year, 6 months, etc.). Cultural Care cannot provide documentation explicitly pro-rating payments received to a specified range of dates. Contact our office if you require any assistance in claiming a Dependent Care reimbursement.
Withholding for au pair taxes
Because the maximum tax burden for the vast majority of au pairs is less than $1,000, there is no need for the au pair to make quarterly estimated payments. In addition, because au pair wages are deemed by the IRS to be paid for domestic service in a private home, they are not subject to mandatory income tax withholding on Forms 941 and W-2 by the host family.
Host families usually do not need to pay federal unemployment taxes for their au pair or to withhold Social Security and Medicare taxes. There are some rare cases where this rule might not apply – please refer to our downloadable guide for more details.
Other potential host family tax and financial issues
We strongly recommend that you inquire with a professional insurance advisor about specific state laws and requirements which may include, but not be limited to, workers’ compensation insurance and state unemployment taxes.
Sunday, 4 February 2018 9:11 PM