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Oregon Fact Sheet Household Tax Compliance Tips


HOMEWORK SOLUTIONS IS HERE TO HELP!

 

Payroll tax compliance for your new employee does not need to be terrifying, time consuming or expensive. HomeWork Solutions is a nationally recognized “household payroll” service company, providing household employers nationwide with trusted and time saving payroll and payroll tax solutions.

 

WORKER CLASSIFICATION IS THE KEY

 

You become a household employer when you hire an individual to perform duties and provide services under your direction in your private home. Generally, these workers are your employees, not independent contractors. Failure to properly classify the worker and make the appropriate employment tax filings and payments is considered tax fraud by the IRS.

 

PAYROLL TAX RESPONSIBILITIES

You are responsible for federal employment taxes when you pay household workers as little as $1,000 in a calendar quarter or when you pay any individual employee age 18 or over $2,700 in a calendar year.

You have both Federal and State tax filing responsibilities. Federal employment taxes are reconciled with the household employer’s annual Federal Income tax return. Your state may require quarterly unemployment tax filings, as well as reports and remittance of state income taxes withheld, if applicable. Employee wages are reported to the Social Security Administration. Your employee is due a W-2 form in January.

Social Security and Medicare Taxes

The household employer is responsible for the payment of all Social Security and Medicare taxes to the IRS. You may choose to either collect your employee’s taxes via payroll deductions or fund these taxes yourself.

Unemployment Taxes

You will make contributions to the IRS and Oregon to fund unemployment and worker re-training programs.

Income Taxes

Federal and state income taxes are ultimately the responsibility of the household employee; however, best practice is to deduct these taxes from your full time employee’s wages to help them avoid owing large sums when they file their annual income tax returns.

OTHER LEGAL RESPONSIBILITIES

Verification of Work Eligibility

All U.S. employers are required to verify a candidate’s employment eligibility using Form I-9.

Fair Labor Standards Act (FLSA) Compliance

Maintain accurate and contemporaneous records including time tracking, gross pay calculations, and detailed records of all deductions from the employee paycheck.

Pay no less than minimum wage on an hourly rate basis.

Health Insurance

You are not required to provide employee health insurance, however there are financial and retention advantages to contributing some or all of your employee’s health insurance premium. HWS is happy to discuss this with you.

OREGON LABOR LAWS

Minimum Wage

Oregon defers to the FLSA, which requires that all domestics, excluding companions, be paid at no less than the federal minimum wage.

Oregon minimum wage requirements vary by county. There is an interactive map on the official government website which may help you to identify what the minimum wage is where you live.

  • $14.20/hr is the standard Oregon minimum wage. This applies to Benton, Clatsop, Columbia, Deschutes, Hood River, Jackson, Josephine, Lane, Lincoln, Linn, Marion, Polk, Tillamook, Wasco, Yamhill, and parts of Clackamas, Multnomah, & Washington outside the urban growth boundary.
  • $15.45/hr is the minimum wage for the Portland metro area. This applies to areas within the urban growth boundary, including parts of Clackamas, Multnomah, and Washington
  • $13.20/hr is the minimum wage for the non-urban area. This applies to Baker, Coos, Crook, Curry, Douglas, Gilliam, Grant, Harney, Jefferson, Klamath, Lake, Malheur, Morrow, Sherman, Umatilla, Union, Wallowa, and Wheeler

 

Overtime Pay

All live-out workers are to be paid an overtime differential of 1.5 times the hourly wage for hours over 40 in a 7 day week. Live-in domestics, again excluding companions, are entitled to overtime for hours over 44 in a 7 day week.  Overtime or premium pay is not required for hours worked in excess of 8 per day or on weekends or holidays.

You must give your employee at least 24 consecutive hours of rest each workweek. If they agree to work on their anticipated day of rest, you must pay them the overtime rate for all hours worked on that day.

Paid Time Off

Oregon’s Domestic Workers Bill of Rights mandates after one year of service, a household worker who averages 30 hours per week must receive 3 paid personal leave days.

If you do not specify in your employment policies or work agreement with your employee, you are required to pay accrued vacation leave upon separation from employment.

Mileage Reimbursement

The federal government establishes and updates a maximum rate for non-taxable mileage reimbursement each year.  The current rate is $0.67 per mile.

Payroll Frequency

Oregon requires that all household workers be paid daily, weekly, bi-weekly, semi-monthly or monthly.  Pay upon involuntary separation is due on the next business day; upon voluntary separation within 5 business days.

Payroll Documentation

Oregon requires all employers to provide itemized pay stubs for each wage payment. HWS’ Complete Payroll Services fully satisfy Oregon’s pay stub law.

Employment Contract Requirements

Oregon does not have employment contract requirements. However, a free sample work agreement can be found here.

Workers’ Compensation Insurance

Oregon does not require household employers to obtain Workers’ Compensation Insurance. However, HWS ALWAYS recommends obtaining a Workers Compensation Insurance policy for the protection it provides in the event of a work-related injury sustained by your employee. A policy can usually be obtained easily and cost effectively by contacting your Homeowner’s or Renter’s Insurance provider. HWS can help you obtain this insurance through our insurance partner (just give us a call).

State Unemployment Insurance

Oregon requires a new employer state unemployment insurance tax of 2.4% for the first $35,700 wages paid to each employee. This may vary if you have previous employees.

Frequency of Tax Filings

Oregon requires quarterly tax filings for unemployment insurance taxes and income tax withholdings.

Domestic Workers Bill of Rights (DWBR)

Oregon has a Domestic Workers Bill of Rights (DWBR) which includes requirements for sick time, breaks, and other protections for your employees. Further explanation of the DWBR can be found here.

HWS WILL HELP YOU DO THE RIGHT THING

 

HWS knows that most families want to pay their household employees legally and ensure that the employee receives workers compensation and unemployment insurance protections. You also want to establish a principled relationship with your employee who is caring for and interacting with precious family members. Getting the relationship started on the right footing, including complying with legal and tax formalities, helps set the tone for the relationship.

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