Final answer:
A taxpayer would not need to pay Social Security and Medicare taxes for a baby-sitter earning $1,300 a year, as the threshold for paying these taxes for a domestic employee is $2,200 or more in cash wages for the year.
Step-by-step explanation:
A taxpayer would not be required to pay Social Security and Medicare taxes for a domestic employee in the situation where: a baby-sitter who earns $1,300 a year. This is because the IRS requires employers to pay Social Security and Medicare taxes for domestic employees only if they pay cash wages of $2,200 or more (threshold as of 2020). Therefore, only the nanny who earns $22,000 a year and the cook who is paid $35,000 a year, as well as the cleaning lady who is paid $8,000 a year, would fall under the requirements for the employer to pay these taxes, given they meet other conditions for a household employee.
The employer and employee typically split the payroll taxes, with the employee's paycheck showing deductions of 6.2% for Social Security and 1.45% for Medicare. However, it's often noted that the employer's share may effectively be passed onto the employee through lower wages. For independent contractors who receive a 1099 tax statement, they must pay both the employee and employer sides of the payroll tax as they are considered self-employed.
It's also important to remember that the payroll taxes for Social Security cap at a certain wage limit (which was $118,500 in 2015), and Medicare taxes remain at 2.9% with no wage ceiling.