A federal appeals court has reaffirmed that residents in Massachusetts are required to pay foreign au pairs (such as live-in nannies and maids) at least the state minimum wage, and not the lower federal minimum wage. With this court ruling, anyone who hires the services of a foreign au pair in Massachusetts will have to pay them a minimum wage of $12 per hour (state minimum) rather than $7.25 per hour (federal minimum).
This ruling came when the federal appeals court dismissed a lawsuit filed by Culture Care Au Pair of Cambridge, which challenged the state Attorney General Maura Healey’s effort to ensure higher wages along with overtime for foreign au pairs. The ruling now brings the minimum wages of foreign au pairs at par with what domestic workers are paid under Massachusetts employment laws.
An Overview of Tax Laws Related to Au Pairs Working for US Families
Social Security and Medicare Taxes
Social Security and Medicare (FICA) taxes usually do not apply to au pair wages that have a J-1 nonimmigrant or a nonresident alien status. However, if their status is “resident alien”, these taxes may apply. For details, employers should refer to Alien Liability for Social Security and Medicare Tax.
If the au pair is a resident alien and their yearly wage exceeds the applicable threshold, the host family is required to withhold social security and Medicare taxes and report them to the IRS. The host must also apply for an EIN if it’s required to file a W-2 for this purpose. The au pair must also apply for a social security number or individual taxpayer identification number.
Income Tax Withholding
Au pair wages are not subject to income tax withholding and reporting. But the recipient must include the wage in their gross income, and file an individual federal income tax return. Stemming from this, provided both the au pair and the host agree, the au pair may file Form W-4 with the host, indicating their voluntary desire to have withholding federal income tax amount deducted from their weekly wages. The host will also issue to the au pair a W-2 to report their wages and federal income tax withholding.
Federal Unemployment Taxes
If the au pair has a resident alien status, the host family is required to pay federal unemployment tax (FUTA) if the au pair’s wages during any calendar quarter or during the preceding calendar year are equal to or in excess of a certain threshold amount. For more details, household employers should refer to Publication 926, Household Employer’s Tax Guide.
Use NannyPay for DIY Tax Preparation and Filing for Au Pair Wages
To ensure tax compliance as an au pair employer in the US, choose the convenience of NannyPay DIY payroll software to withhold the correct federal income tax from your au pair’s wages. NannyPay can also be configured not to withhold social security and Medicare taxes for au pairs.