Are noncash items given to household employees subject to FICA tax?

Noncash items given to household employees, such as food or lodging, are generally not subject to FICA taxes. FICA taxes (which include Social Security and Medicare taxes) apply primarily to cash wages paid to employees. Noncash benefits do not count as wages for the purposes of FICA tax calculations. This means that if you provide a household employee with noncash items as part of their compensation, these items do not trigger an obligation for FICA tax withholding or payment.

Additionally, while there may be other tax implications for noncash benefits in different contexts, for FICA specifically, the focus remains strictly on cash compensation. Therefore, under normal circumstances, recipients of food, shelter, or other noncash items in lieu of cash payment are not liable for FICA tax on those items. Understanding this distinction is crucial for correctly processing payroll and compliance with tax regulations when it involves household employees.