Schedule H: Household employment taxes

If you currently employ a household employee or are considering hiring one, keep reading. You should know that, for tax purposes, the process is different from hiring regular employees. You’ll be responsible for paying and reporting employment taxes as a household employer. This includes filing a Schedule H with your federal tax return. So, what is Schedule H, and how do you determine if you need to file one?

What is Schedule H?

Schedule H is titled “Household Employment Taxes.” It is a tax form used by household employers. Eligible taxpayers must file it to report household employment taxes to the Internal Revenue Service (IRS). Schedule H breaks down household employees’ payment and tax information. You file this form with your tax return to pay employment and income taxes.

You must file Schedule H with your IRS Form 1040 if one or more of the following is true:

• You paid one (or more) household employees cash wages of $2,600 or more for 2023
• You withheld federal income tax during the 2023 tax year for a household employee
• You paid total cash wages of $1,000 or more in any calendar quarter of 2022 or 2023 to all household employees

Who is a household employee?

There is another factor used to determine whether you need to file Schedule H. You must know if your employee qualifies as a household employee. For this article, household work encompasses activities completed in and around your home. Common roles include cleaning, maintenance, tutoring, gardening, etc. An individual working for you is considered a household employee if you dictate the individual’s work, how they do it, and when. For example:

• The worker must adhere to a specific schedule each week
• They follow your rules of how they do their work in your home

In contrast, if the worker controls how the work is done, they are usually considered self-employed. For example, a plumber coming to fix your leaky sink will generally inform you when he is available and how he will fix the issue. A live-in au pair, however, will usually work the hours outlined by their family and complete tasks to given specifications. The plumber is likely self-employed, while the au pair may be considered a household employee.

Common types of household employees:

• Nannies, babysitters, and au pairs
• Personal chefs
• Personal assistants
• Housekeepers/maids
• Caretakers
• Health aids or private nurses
• Drivers
• Yard workers

Household employment taxes

Household employment taxes are sometimes called nanny taxes. They are accounted for on Schedule H and represent the same three taxes that are withheld from employment wages. Household employment taxes include Social Security, Medicare, and federal unemployment taxes (FUTA tax).

You and your household employee will both contribute to Social Security and Medicare taxes. However, you are responsible for paying all FUTA – employees do not contribute to it through withholding. If you must pay these taxes to the IRS, Schedule H will allow you to calculate the amount you should have withheld and the amount you owe. If you are also required to pay state unemployment insurance (SUI or SUTA tax), a Schedule H credit allows you to reduce your FUTA rate if you qualify.

How and when to file Schedule H

If you’ve determined you must file this form, you may wonder about the filing process. When filling out Schedule H, you’ll need to include the following information:

• Your name, SSN, Employer Identification Number (EIN)
• Wages paid to your household employee(s)
• Social Security and Medicare taxes withheld
• FUTA tax liability
• Income tax deducted from employee’s wages (if applicable)

Once you’ve completed Schedule H, file it with the IRS. If you’re filing a current-year tax return, you’ll attach it to your Form 1040. You can file this form alone if you’re not filing a tax return. Most household employers must file and pay employment taxes by April 15 each year, but remember that due dates may vary.

Get more help with Schedule H and household employment taxes

Schedule H is an important part of your tax responsibility and filing requirements as a household employer. But keeping track of your filing requirements doesn’t have to be a headache. Block Advisors is here to help!

Get back to doing what you love and let our experts lighten your load, in person or virtually, year-round – as always – backed up by the Block Advisors guarantees. Our taxes, bookkeeping, payroll, incorporation, and beneficial owner reporting services are designed with small business owners like you in mind.

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