Domestic Employment

Domestic employment is work performed in a private home, or a chapter of a college fraternity or sorority, as part of the upkeep of the home or chapter, and not on behalf of a home-based business. Generally, work performed in domestic employment includes services performed by nannies, caretakers, companions, housekeepers, gardeners or chauffeurs for family use.

Domestic employees work for individuals or sole proprietors in a home.  In some cases, the wages are paid by an entity, such as a trust, formed specifically to pay the domestic employee wages for an individual.

An employer becomes liable to pay unemployment taxes under the Texas Unemployment Compensation Act if the employer pays gross wages of $1,000 or more in a calendar quarter for domestic services.  Once a domestic employer becomes liable, they must pay state unemployment taxes on all wages paid as of January 1 of that entire year.  When you are required to report for the year, you must report all wages even if the wages are less than $1,000 in a quarter.

TWC Rules 815.107 and 815.109 require all employers to report Unemployment Insurance (UI) wages and to pay their quarterly UI taxes electronically. Employers that do not file and pay electronically may be subject to penalties as prescribed in Sections 213.023 and 213.024 of the Texas Unemployment Compensation Act (TUCA). For additional information about waivers or filing your report or paying your taxes electronically, please contact your nearest tax office.

TWC provides a few options for reporting wages paid to domestic employees and paying taxes:

• Annually rather than quarterly:  If you report to TWC only wages for domestic workers, you may elect to report employee wages and pay state unemployment taxes annually rather than quarterly. To choose the annual option, submit an Annual Election Form (Form C-20) by December 31^st for the following year.
• Online:  Use our Unemployment Tax Services system to report employee wages and pay state unemployment taxes online either quarterly or annually. Registration for Unemployment Tax Services is quick and easy.
• By mail for employers with an approved hardship waiver on file with TWC:  We mail a report form to you a month prior to when each quarterly report is due. The forms are pre-printed with your individual account information. Employers return completed forms with their tax payment.

Once a domestic employers elects to report and pay annually, domestic employers do not need to resubmit the election form each year as long as they employ only domestic employees. If you wish to stop reporting annually, submit a Domestic Employer’s Revocation Form (Form C-20F) by December 31^st for the following year.

If you elect to report annually, you may be required to provide wage information at any time in order to verify unemployment benefit claimant wages.