If you paid a household employee cash wages of $2,000 or more during a calendar year.
If you withheld federal income tax for a household employee during a calendar year.
If you paid total cash wages of $1,000 or more in any calendar quarter of the current or previous year to all household employees.
With this information in mind, here is a question you need to answer: is the person working in your home actually considered an employee? The IRS defines a household employee as follows:
"If you hired someone to do household work and you could control what work he or she did and how he or she did it, you had a household employee. This is true even if you gave the employee freedom of action. What matters is that you had the right to control the details of how the work was done."
Types of Household Employees
Many people struggle to determine if they must file Schedule H, as they don't fully understand who is considered a household employee. In short, this is anybody you pay to provide services in your household, including but not limited to:
Private nurse or health aide
Housekeeper or maid
Gardener or landscaper
Personal assistant or personal chef
When and Where to File Schedule H
Once you come to the conclusion that you have to file Schedule H, it is important to become familiar with the finer details of when, where and how to move forward.
Exceptions: if you receive an extension to file your tax return, you can also hold off on filing Schedule H. In the event that you are a fiscal year filer, you will want to remit your return, along with Schedule H, by the due date of your fiscal year return.
Schedule H Records
If you have a household employee and are required to file Schedule H, there are some things you need to know from a recordkeeping perspective.
Keep copies of Schedule H for a minimum of four years from the filing due date.
Each payday, record and keep amounts and dates for the following: noncash and cash wage payments; Social Security tax withheld; Medicare tax withheld; and federal income tax withheld.
While some IRS forms are confusing, Schedule H is relatively straightforward and simple to understand once you know what is being asked of you.
Once you've reviewed the Schedule H instructions, if you have any questions or concerns, you will want to consult with a tax professional.