Federal Income Tax Withholding for Household Employees
Federal income tax withholding is optional for household employees — you're not required to withhold it, but your employee can ask you to by filling out a W-4. If they do, you calculate the withholding based on their filing status and any adjustments on that form, and pay it in along with your other household employment taxes.
Required vs. optional: the key distinction
This is the part people mix up most often:
- Social Security and Medicare (FICA) — required once you're over the threshold, no choice involved
- Federal income tax withholding — optional, entirely up to your employee whether they want it withheld from each check or handled themselves at tax time
Why an employee might want it withheld
Without withholding, your employee is responsible for paying their own federal income tax — usually through estimated quarterly payments, or a lump sum at tax time. Some employees prefer having it withheld gradually so there's no surprise bill in April; others prefer the higher take-home pay and handle it themselves. If they're the one deciding, they can read Should I withhold federal income tax?.
How the calculation works
If your employee opts in, withholding is based on the IRS's percentage method, using their filing status, any dependents, and other adjustments from their W-4 — the same approach used for regular employees, just applied to household pay periods.
This is exactly what Sadie calculates automatically from the choices your employee makes during their private setup — you don't do this math by hand.
What if your employee changes their mind later
They can update their withholding choice at any time — it takes effect on future paychecks, not retroactively.
Frequently asked questions
Am I required to offer federal withholding?
You're required to honor it if your employee requests it via a completed W-4, but you're not required to withhold anything if they don't ask.
Does state income tax withholding work the same way?
It varies by state, but the choice works the same way in Sadie: your employee picks whether to withhold state income tax during their setup, the same as federal. Nine states have no wage income tax at all, so there's nothing to choose there. See our coverage page for your state.
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Let your employee choose. Sadie does the math either way.
During their private setup, your employee picks whether to withhold federal income tax — Sadie calculates the exact amount from there.
This guide is general information, not tax or legal advice. Rules vary by state and change over time — confirm anything specific to your situation with a licensed professional or your state's labor department.