Snowbird payroll: paying the people who watch your US home

When a house helper becomes your household employee

The test is control. If you decide what gets done and how — the cleaner works your checklist on your schedule, the house checker visits weekly the way you instructed — the IRS treats them as your household employee. It does not matter that the home is a seasonal residence, that the arrangement is casual, or that you live in Canada for most of the year: the work happens in the US, so US household-employer rules apply.

The thresholds are lower than most snowbirds expect. Cash wages of $2,800 to any one worker in a year trigger Social Security and Medicare obligations, and just $1,000 in any calendar quarter — counted across all your household help — triggers federal unemployment tax. A house checker on a modest monthly arrangement can cross both without anyone noticing, which is exactly how these problems are usually discovered late.

What household-employer status actually requires

Not a full business payroll — but a real set of filings:

• An EIN, the employer identification number all the forms hang on.
• Social Security and Medicare tax on the wages. Many household employers simply fund the employee's half rather than withhold it — allowed, and simpler.
• A W-2 to the worker each January, with the copy filed with the Social Security Administration.
• Schedule H, which totals the year's household employment taxes. It attaches to a 1040-NR if you file one — and if you have no US return to file, Schedule H can be filed on its own.
• State rules vary: Florida exempts domestic servants from mandatory workers comp, while California generally requires coverage for household workers. Check the state before assuming.

One thing you cannot do is issue a 1099. The 1099-NEC is a form for business payers; a household worker who meets the employee test gets a W-2, full stop.

The contractor alternative — usually the right answer

Most snowbirds should not become employers at all. Hire businesses, not individuals: a licensed home-watch service, a pool company, a lawn service, a cleaning company that sets its own methods, carries its own insurance and serves a full client list. You get an invoice trail and no employment filings — and because these are personal household payments rather than business payments, there is no 1099 duty either.

The distinction to keep clean: a company you hire for a result is a vendor; an individual you direct is an employee. Paying the retired neighbour cash to keep an eye on the place sits on the wrong side of that line and leaves no paper for anyone — including your insurer, if something goes wrong while they are on the property.

Keep a thin file for every vendor: the service contract, proof of their liability insurance, and the invoices. How you pay changes nothing — a cheque from your Canadian account, a US-dollar account in Florida, or a card all leave the analysis exactly where it was — but the records are what let you show, years later, that these were arm's-length businesses and not staff.

Keeping it coordinated with your Canadian life

None of this touches CRA payroll — no T4s, no source deductions — and because the home is personal, the wages are not deductible in either country. What matters is that the US filings land inside your existing cross-border position rather than beside it: we obtain the EIN, produce the W-2, and file Schedule H with (or without) the 1040-NR, alongside the rest of your snowbird US property tax picture.

Two situations change the shape. Rent the home out for part of the year and the caretaker's cost starts crossing into rental-expense territory, where business payroll rules — not household rules — govern the same worker. And while hiring help has no effect on your US day count or residency position, the records you keep for it often turn out to be useful years later, when the home is sold and every improvement and carrying cost gets its moment.

Source: IRS — Publication 926, Household Employer's Tax Guide.