How to File Schedule H 2017 for Household Employment Taxes

Household Employment Taxes 2017 Checklist

Schedule H 2017 applies to taxpayers who paid household employees wages subject to Social

Security, Medicare, or federal unemployment taxes during the 2017 tax year. This form calculates household employment taxes separately from business schedules and requires direct wage and tax documentation rather than business income statements.

Filing Requirements and Thresholds

You must file Schedule H 2017 if you paid cash wages of $2,000 or more to any one household employee during 2017. Cash wages include payments made by check, money order, or any other form of monetary compensation but exclude the value of food, lodging, clothing, or other noncash items.

Federal unemployment tax obligations arise when you pay total cash wages of $1,000 or more in any calendar quarter of 2016 or 2017 to household employees. The $2,000 threshold determines Social Security and Medicare tax obligations for individual employees throughout the tax year.

Required Household Employee Documentation

• Each household employee must be identified using their full legal name, complete
• A completed Form W-4 is required when federal income tax withholding has been
• Form I-9 documentation must be retained to verify that the household employee is
• Complete wage records must be maintained to document all cash payments made to the

1. Step 1: Verify Filing Threshold and Gather Employee Documentation

   Determine whether you meet the filing threshold by checking total wages paid to each household employee during 2017. The Social Security and Medicare threshold applies when any single household worker receives $2,000 or more in cash wages, while the federal unemployment threshold applies when total wages reach $1,000 or more in any calendar quarter.

   Gather essential documentation for each household worker before preparing Schedule H: mailing address, and a valid Social Security number for employment and tax reporting purposes. agreed upon between the household employer and the employee. authorized to work in the United States. household employee during the 2017 tax year.

2. Step 2: Obtain Required Identification Numbers

   An employer identification number becomes necessary when you have household employees requiring Schedule H filing. You cannot substitute your Social Security number for an EIN when filing household employment tax forms.

   Apply for an EIN online at IRS.gov/EIN for immediate assignment, or submit Form SS-4 by fax or mail to receive your number within approximately four weeks. Complete Part I of Schedule H with your EIN, name, address, and Social Security number as shown on Form 1040, Form

   1040-NR, Form 1040-SS, or Form 1041.

3. Step 3: Calculate Social Security and Medicare Taxes

   Part I of Schedule H 2017 calculates the combined employer and employee shares of Social

   Security tax and Medicare taxes. The Social Security tax rate remains 6.2% each for employer and employee on wages up to $127,200, totaling 12.4% when combined.

   Medicare tax applies at 1.45% each for employer and employee on all wages without limit, totaling 2.9% combined. Additional Medicare Tax withholding of 0.9% applies only to employee wages exceeding $200,000 in the calendar year, with no employer portion required.

   Enter total cash wages subject to Social Security tax on line 1 and multiply by 12.4% to determine combined payroll taxes on line 2. Enter total cash wages subject to Medicare tax on line 3 and multiply by 2.9% to calculate combined Medicare tax on line 4.

4. Step 4: Calculate Federal Unemployment Tax

   Part II of Schedule H 2017 addresses federal unemployment tax obligations based on wages paid during 2016 and 2017. The FUTA tax rate stands at 6.0% of employee wages, but you may claim a credit of up to 5.4% against this tax.

   Complete Section A if you paid unemployment contributions to only one state, paid all contributions by April 17, 2018, and all FUTA-taxable wages were also taxable for state

   unemployment purposes. Enter the state name, total contributions paid, and total cash wages subject to FUTA tax using the $7,000 per employee annual limit.

   Section B requires completion when you paid contributions to multiple states, paid contributions after the filing deadline, or operated in a credit reduction state. Calculate the credit reduction using Worksheet 2 from the Schedule H instructions to determine the proper credit amount against the federal unemployment tax.

5. Step 5: Determine Optional Federal Income Tax Withholding

   Federal income tax withholding remains optional for household employers unless you and your employee agree to withholding arrangements. Your employee must provide a completed Form

   W-4 to request withholding, and either party may end the agreement by providing written notice.

   Enter any federal income tax withheld from household employee wages on line 7 of Schedule H.

   Use the income tax withholding tables in Publication 15, also known as Circular E or the

   Employer’s Tax Guide, to calculate proper withholding amounts based on the employee’s W-4 elections and pay frequency.

6. Step 6: Complete Total Household Employment Taxes

   Part III combines all applicable taxes to determine your total household employment tax liability for 2017. Add lines 2, 4, 6, and 7 from Part I to calculate total payroll taxes, including Social

   Security, Medicare, and federal income taxes on line 8.

   Enter the amount from line 8 on line 25, then add line 16 or line 24 from Part II to complete line

   26. This combined amount represents your total household employment taxes that transfer to the appropriate line of Form 1040, Form 1040-NR, Form 1040-SS, or Form 1041.

• Compensation paid to a household employee who is your spouse is excluded from
• Payments made to your child who was under age 21 during the 2017 tax year do not
• Compensation provided to a parent is generally excluded from Social Security tax and
• Household employee compensation paid to individuals under age 18 is excluded from

7. Step 7: Attach Schedule H and Complete Required Forms

   File Schedule H with your 2017 Form 1040 or Form 1040-NR by April 17, 2018, entering the total from line 26 on the household employment taxes line. Taxpayers not required to file an income tax return must file Schedule H by itself by the same deadline.

   Complete Part IV with your address and signature only when filing Schedule H as a standalone form without an accompanying tax return. Make your payment payable to the United States

   Treasury for the total household employment taxes due.

   Wage Exclusions and Special Rules

   Certain household employee wages receive exclusion from Social Security tax and Medicare tax calculations under specific conditions:

   Social Security tax and Medicare tax calculations under Schedule H rules. trigger Social Security tax or Medicare tax obligations.

   Medicare tax unless specific caregiving and marital status conditions require those wages to be included.

   Social Security tax and Medicare tax unless household services constitute the employee’s principal occupation.

   Parent wages require inclusion when your child was living with you and was under age 18 or had a physical or mental condition requiring personal care for at least four continuous weeks during the calendar quarter. You must also be divorced and not remarried, widowed, or married to someone whose condition prevented caring for your child.

   Transportation Benefits and Noncash Compensation

   Cash reimbursements for qualified parking exclusion may reduce wages subject to payroll taxes when specific requirements are met. You can reimburse your household worker up to $255 per month for qualified parking at or near your home or at a location from which the employee commutes to your home.

   The commuter transportation benefit allows reimbursement of up to $255 per month for combined commuter highway vehicle transportation and transit passes during 2017. Cash reimbursements exceeding these monthly limits count as taxable wages subject to Social

   Security tax and Medicare tax, so you must include excess amounts in wage calculations on

   Schedule H.

   Form W-2 and Form W-3 Filing Requirements

   You must file Form W-2 for each household worker who received $2,000 or more in cash wages subject to Social Security and Medicare taxes during 2017. Provide Copies B, C, and 2 of Form

   W-2 to each employee by January 31, 2018.

   Send Copy A of all Forms W-2 with Form W-3 to the Social Security Administration by January

   31, 2018. Electronic filing through the SSA’s Form W-2 Online service generates Form W-3 automatically based on submitted wage information, eliminating the need for a separate paper form.

   Additional Guidance and Resources

   Publication 926 provides comprehensive guidance for household employers on determining worker classification, calculating employment taxes, and completing required forms. The

   Employer’s Tax Guide contains detailed withholding tables, deposit requirements, and reporting procedures that household employers may reference when managing tax obligations throughout the year.

   Publication 926 also explains how to verify employment eligibility, understand state unemployment tax requirements, and maintain proper records for household employment tax purposes. Household employers should consult Publication 926 before filing Schedule H to ensure accurate tax calculations and complete compliance with federal employment tax regulations.

   Record Retention Requirements

   Household employers maintain employment tax records for at least four years following the due date of the return or the date taxes were paid. Records must include employee names, addresses, Social Security numbers, dates of employment, and complete wage payment details throughout the year.

   Keep completed Forms W-4 from employees who requested federal income tax withholding separate from tax return copies. Retain Form I-9 employment eligibility verification documents to demonstrate compliance with immigration verification requirements during potential audits or inquiries.

   If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.