The government requires individuals who employ household workers to report and pay employment-related taxes. This ensures compliance with tax obligations and secures benefits like Social Security and Medicare for household employees. To calculate and report these taxes, employers must use a specialized document designed for household employment tax purposes.
Schedule H is a tax form used by individuals who employ household workers, such as housekeepers, nannies, gardeners, or caregivers, to report wages paid and calculate the employment taxes owed. It allows employers to comply with federal requirements for paying Social Security, Medicare, unemployment taxes, and income tax withholding on behalf of their household employees.
Taxpayers use IRS Schedule H if they have hired and paid a household employee and need to report and pay applicable employment taxes. Common scenarios where a Schedule H tax form is required include:
Paying a household employee $2,600 or more in wages during the tax year (as applicable for 2023, subject to annual changes).
Paying $1,000 or more in total wages to household employees in any calendar quarter (used to calculate unemployment tax).
Withholding Social Security and Medicare taxes from a household employee's wages.
Several parties play a role in completing 1040 Schedule H:
1. Collect records: Gather details of household employees, wages paid, and any withholding or tax payments made throughout the year.
2. Download form 1040 Schedule H: Access the form through the official IRS website or trusted platforms like Lawrina.
3. Fill out Schedule H: Complete sections for Social Security, Medicare, FUTA taxes, and any withheld income taxes.
4. Submit with your annual filing: Attach the completed IRS nanny tax form to your form 1040, 1040-SR, or 1040-NR and file by the tax deadline.