FAQ: Do au pairs have to pay taxes?

While Cultural Care Au Pair is not able to provide specific tax information for host families and au pairs because their circumstances are so different, we are pleased to provide general guidelines regarding host family and au pair taxes, as well as information to help au pairs complete their tax returns. Please call us, Kathrin & Joe, for general tax information and/or for a copy of our Guide to Au Pair and Host Family Taxes (a copy is also available in your CCAP Online Account), which Cultural Care updates frequently.

Important Au Pair Tax Information

  • The IRS considers au pairs to be “employees” of the host family for tax reasons, even though they are in the United States on a “cultural exchange” visa.  This means that au pairs are required to file U.S. individual income tax returns 
  • By April 15, the au pair should file form 1040NR-EZ or 1040NR to report his or her au pair stipend for the previous calendar year
  • In order to file income taxes in the United States, all au pairs need to have either a social security number or an Individual Taxpayer Identification Number (“ITIM”)
  • Au pairs are allowed to claim a personal exemption for themselves, but they are NOT eligible for the standard deduction in their tax filing.  As stated above, au pairs are not considered “students” by the IRS, so an au pair is also not eligible to exclude au pair wages from gross income under the student article of any U.S. income tax treaty
  • Because the maximum tax burden for the vast majority of au pairs is less than $1,000, there is usually no need for the au pair to make quarterly estimated payments, or to have the host family withhold taxes.  There are some exceptions to this rule which are explained in our more detailed guide, which is downloadable above.

uncle-sam

Important Host Family Tax Information

  • 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 are all eligible under the Child and Dependent Care Tax Credit.  Contact Kathrin & Joe for Cultural Care’s federal tax ID.
  • Dependent Care Reimbursement Programs: The eligibility requirements for these programs, which are often called “Flex-Spending Accounts” or “FSAs”, are usually identical to those for the Child and Dependent Care Tax Credit. However, expenses 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 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 you either the total amount you paid in a given calendar year, or the amount you paid in a given calendar year with the dates of the applicable full au pair term of service (e.g. one year, six 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

If you have specific tax questions, you should contact a local professional tax advisor or speak directly with the Internal Revenue Service and/or the Franchise Tax Board.

Saturday, 4 October 2014 2:10 PM

Comments

Leave a reply