EIN or SSN: How Should a Household Employer File Employment Taxes?

May 15, 2019 | Household Payroll & Taxes

One of the basic responsibilities of household employers is to file employment taxes. But do you do this with an EIN or SSN?

EIN or SSN? Some household employers mistakenly think they don’t need an Employer Identification Number (EIN) and can just file their employment taxes at the end of the year using their Social Security Number (SSN). This perception comes from bad advice from those who may not understand the nuances of household employment.

An EIN is a nine-digit number issued by the IRS that is not the same as an SSN. The IRS clearly states in its instructions for Schedule H: “don’t use a social security number in place of an EIN.” Schedule H is the form families file with their personal tax returns to report their household employment taxes. An EIN must appear on all forms filed as a household employer including an employee’s W-2.

The easiest way to understand the difference is that an EIN is a federal tax identification number for employers. An SSN is an identifier for individuals.

You can apply for an EIN online or receive one by mail or fax by submitting Form SS-4. You can get your EIN immediately if you apply online. It’ll generally take within four days by fax and about four weeks by mail. When applying for an EIN, you’ll need basic information like name, Social Security Number, the physical address where the work will be performed (typically your home address), and the month your employee will start work. Save your EIN confirmation letter with your files.

Once you have an EIN, you don’t need to apply for another one even if you change employees. You can keep the same EIN for as long as you need it.

Despite the warning from the IRS, some payroll providers may still try to set up families as household employers using an SSN. That’s because they treat families with household help like sole proprietors. Their processes are set up to handle businesses but not household payroll. A sole proprietor can use a Social Security Number as the tax identification for their business since they file and remit taxes through their own personal tax return.

These are the types of unintentional mistakes that can cause household employers hassles down the road and may result in fines and penalties for late or incorrect filings.

GTM can help

GTM has managed household payroll and taxes for nearly 30 years. With a team of specialists who deal only with household employment, you can feel confident that your employer setup, payroll, and taxes will be handled the right way. For a free, no-obligation consultation call (800) 929-9213.