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FICA Coverage Thresholds for Domestic Employees and Election Workers Increase in 2020

The Social Security Administration (SSA) has announced that the Federal Insurance Contributions Act (FICA) coverage thresholds will increase in 2020 to $2,200 for domestic employees and to $1,900 for election workers. Income below the FICA thresholds is not subject to FICA taxes.

A coverage threshold is an amount of earnings that triggers coverage under Social Security. Earnings below the FICA coverage threshold are not subject to Social Security and such earnings do not count toward future benefits.

There are specific coverage thresholds for self-employed workers, farm workers, domestic employees, and election workers. The thresholds for self-employed workers and farm workers are fixed amounts; however, the thresholds for domestic service employees and election workers vary with changes in the National Average Wage Index.

For 2020, the domestic service employee coverage (aka nanny tax) threshold amount increases to $2,200, and the coverage threshold amount for election officials and election workers increases to $1,900.

Thus, cash remuneration paid by an employer for domestic service in the employer’s private home is not FICA wages in 2020 when the amount paid is less than $2,200. And, income of less than $1,900 earned by election workers during 2020 will not be subject to FICA tax.

For more information about this article, please contact our tax professionals at taxalerts@windes.com or toll free at 844.4WINDES (844.494.6337).

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