A coverage threshold is an amount of earnings that triggers coverage under the Social Security program. The Social Security Administration (SSA) has announced a new threshold for “cash” wages paid by an employer for domestic service in the employer’s private household. Employer Social Security tax obligations are an often-missed liability for households engaging individual assistance with domestic chores and services.
For 2020, these wages are subject to FICA tax (often referred to as the nanny tax) if the amount of wages paid during the year is more than $2,200. The amount represents an increase of $100 from the $2,100 threshold limit for 2019. This threshold applies separately to each household employee.
In addition, the SSA has announced that the FICA coverage threshold for election workers has increased from $1,800 (for 2019) to $1,900 for 2020.
Visit the SSA website for additional information about these thresholds.