Certain family members of an employer are exempt from FICA and FUTA as follows:
- a child less than 18 years of age employed by a parent;
- service not in the course of the employer’s trade or business;
- domestic service by a child under age 21, spouse or parent, except a parent in the employ of his child, if:
- the employer is a surviving spouse or a divorced individual and has not remarried, or has a spouse living in the home who has a mental or physical condition which results in such spouse’s being incapable of caring for a child or stepchild;
- a child or stepchild is living in the home, and
- the child or stepchild has not attained the age of 18 or had a mental or physical condition which requires the personal care and supervision of an adult for at least four consecutive weeks in the calendar quarter in which the service is rendered.
- All service performed in the employ of a child or spouse, or service performed by a child under the age of 21 is exempt from FUTA.
- The exception for family service does NOT apply to service performed for a corporation even if the spouse or child controls the corporation.
- A valid employer-employee relationship must exist under common law standards in order for coverage to be extended to service performed for a corporation, and if the corporation is merely used as a device to obtain Social Security coverage for a parent or child, a court may ignore the corporate entity and deny coverage.
- The family employment exclusion also does not apply to service performed for a partnership, except
- provided a valid employer-employee relationship exists, and
- the requisite family relationship exists between the employee and each of the partners.