Navigating the world of taxes can be daunting for a household employer. If you employ someone to work in your home, such as a nanny, home health aide, housekeeper or gardener, you might need to file a Schedule H with your federal tax return.
This guide will help you understand Schedule H, Household Employment Taxes, why it’s important and offer tips to help you complete it.
Am I a Household Employer?
According to the IRS, your nanny is considered a household employee because you control what work he or she will do or set requirements on how that work will be done.
What are Nanny Taxes?
Nanny taxes are the payroll taxes household employers are responsible for withholding and paying each paycheck when they hire a household employee, such as a nanny. Required taxes include Social Security and Medicare (FICA).
You may also need to withhold and pay federal and state income taxes and local taxes, depending on where you live.
Learn more about calculating, filing and paying household employees and payroll taxes in our Guide to Nanny Tax and Payroll.
What is Schedule H
Schedule H is part of IRS Form 1040, U.S. Individual Tax Return. Household employers use it to report and pay employment taxes for household employees. These taxes include Social Security, Medicare and federal unemployment taxes (FUTA).
Who Needs to File Schedule H?
Household employers need to file Schedule H if they paid a household employee cash wages of $2,700 or more in 2024 ($2,800 in 2025) or withheld federal income tax from their wages.
Why Schedule H is Important
Filing Schedule H is crucial for compliance with federal tax laws. It helps ensure household employees receive proper credit for Social Security and Medicare, which are important for their future benefits. It also helps household employers avoid potential penalties for not reporting employment taxes.
How to Complete Schedule H
Here’s an overview of the steps involved in filing Schedule H.
Gather Necessary Information
Before you start filling out Schedule H, you’ll need:
* Total cash wages you paid to your household employee.
* The amount of Social Security and Medicare withheld.
* The FUTA tax paid, if applicable.
* Any federal income tax withheld.
Fill Out the Form
* Calculate the total wages paid.
* Compute Social Security and Medicare taxes.
* Figure out FUTA tax liability.
* Add up all taxes and withholdings to get the total household employment tax.
Submit with Your Tax Return
Schedule H must be attached to your Form 1040 when you file your annual tax return. Be sure to keep copies of all forms and documentation for your records.
Common Mistakes to Avoid
Filing Schedule H can be straightforward. But mistakes can happen. Watch out for these common pitfalls.
Misclassifying Workers
Make sure the person you’re employing is classified correctly as a household employee, not an independent contractor. Misclassification can lead to errors in tax reporting.
Missing Deadlines
Filing late can result in penalties and fines. Make sure to file Schedule H with your tax return by the annual deadline, typically April 15.
Incorrect Calculations
Double-check your math. Incorrect calculations can lead to underpayment or overpayment of taxes.
Need Assistance?
Resources are available to help household employers.
Tax Professionals
Consider hiring a tax professional familiar with household employment taxes. They can provide guidance in completing and filing your taxes.
IRS Resources
The IRS offers line-by-line instructions on how to fill out Schedule H on its official website.
Payroll Service Provider
Work with a payroll service provider who specializes in household and nanny payroll.
SurePayroll® By Paychex simplifies household payroll for you and your employees. Run payroll from anywhere with any device, take advantage of automatic tax calculations, filing and deposits, receive a signature-ready Schedule H to file with your taxes and more.
Learn how SurePayroll can help you take care of the people who take care of your family.
Updated 12/20/2024
