What Schedule H (2010) Is For
IRS Form 1040 Schedule H (2010) is the tax form used by a household employer to report household employment taxes for the 2010 tax year. A person must file Schedule H when wages paid to a household employee meet the thresholds for Social Security tax, Medicare tax, or federal unemployment tax. This tax form enables employers to report household employment taxes, including the same three taxes required for domestic workers: Social Security, Medicare, and federal unemployment taxes. The Internal Revenue Service requires this form when an employer pays cash wages for household work and controls not only the work but also how the employee completes the services.
A household employer must file Schedule H with Form 1040 or as a standalone filing if no individual income tax return is required for the year. Filing is necessary when the employer paid total cash wages of $1,700 or more to any household employee in 2010, or when $1,000 or more was paid in any calendar quarter during 2009 or 2010. The form is also required when the employer withholds federal income tax or when household employees request that the employer voluntarily withhold income taxes. These rules ensure employment and income taxes are calculated accurately, reported on time, and appropriately credited through the Social Security Administration for employees’ wages.
When You’d Use Schedule H
A household employer must file Schedule H when total cash wages paid to a household employee reach the 2010 filing thresholds. Filing is required when the employer paid $1,700 or more in cash wages during 2010 or $1,000 or more in any calendar quarter in 2009 or 2010. Filing is also required if the employer chose to withhold federal income tax or withheld federal income tax at the employee’s request. These rules apply to domestic workers hired for household work when the employer controls how the worker completes tasks.
Late or corrected filing follows the individual income tax return process. The employer must use Form 1040X to correct a previously filed Form 1040 with Schedule H or file a corrected tax form if Schedule H was submitted alone. Filing ensures household employers properly report household employment taxes and pay employment taxes owed. Accurate reporting supports both Social Security and Medicare requirements for employee wages and compensation.
Key Rules or Details for 2010
A household employer must calculate Social Security tax and Medicare tax when the total cash wages reach $1,700 for any household employee in 2010. The employer and employee each pay half of these FICA taxes, and Social Security applies up to the annual wage limit; Medicare, however, has no limit on the amount that can be taxed. Federal unemployment taxes apply if the employer paid $1,000 or more in any quarter in 2009 or 2010, and FUTA tax applies to the first $7,000 of employment wages. The FUTA rate may be reduced if the state unemployment tax was paid on time.
Certain wages do not count toward household employment taxes, including payments to a spouse, a child under age 21, or a parent. Employers must distinguish between household employees and independent contractors, who have control over how services are performed. Only employees’ wages for household work are used to calculate household employment tax under the Federal Unemployment Tax Act. These rules enable employers to determine taxes owed and complete Schedule H accurately.
For complete details on wage reporting, withholdings, and tax filings, see our guide for Individual Schedules.
Step-by-Step (High-Level)
Step 1: Gather Information
A household employer needs the following information to complete Schedule H:
- Total cash wages paid to each household employee during 2010
- Amounts withheld for federal income tax
- Social Security and Medicare wages paid
- Amount of federal unemployment wages
- Employer Identification Number
- State unemployment tax information
Step 2: Calculate Social Security and Medicare Taxes
A household employer completes Part I of Schedule H by calculating:
- Total Social Security wages and Social Security tax
- Total Medicare wages and Medicare tax
- Any withheld federal income tax
Each calculation must account for both the employer share and the employee share of these taxes.
Step 3: Calculate FUTA Tax
A household employer completes Part II by determining whether FUTA wages apply. The employer reviews salaries paid in 2009 and 2010 to determine if any calendar quarter meets the $1,000 test. If state unemployment taxes were paid on time, the simplified FUTA calculation may be used.
Step 4: Total Employment Taxes
Part III combines all amounts calculated in Parts I and II. The final amount is reported on the corresponding line of the individual income tax return.
Step 5: File Schedule H
The employer must:
- Attach Schedule H to Form 1040 or file it separately if no Form 1040 is required.
- File by April 18, 2011, which is the deadline for 2010 returns.
- Include payment for taxes owed.
Common Mistakes and How to Avoid Them
- Using a Social Security Number instead of an EIN: Apply for and use an Employer Identification Number to meet federal household employer filing requirements.
- Misclassifying a household worker as an independent contractor: Treat workers who meet employee criteria as employees to ensure proper tax withholding and reporting.
- Ignoring wage thresholds for Social Security, Medicare, and FUTA: Check annual IRS thresholds so you withhold and pay the correct employment taxes.
- Failing to report all taxable wages: Include both cash wages and any additional wages, such as when the employer pays the employee’s share of Social Security tax.
- Missing Form W-2 and Form W-3 filing deadlines: Track annual due dates and submit required wage forms on time to avoid late-filing penalties.
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What Happens After You File
After an employer files IRS Form 1040 Schedule H (2010), the Internal Revenue Service processes the household employment taxes with the individual income tax return and calculates any balance owed. The amount includes employment taxes, such as Social Security tax, Medicare tax, and federal unemployment taxes, based on the total cash wages paid to the household employee. If the employer withheld federal income tax or made estimated payments during the tax year, these amounts reduce what the employer must pay. The Social Security Administration then credits the employee’s wages, ensuring accurate reporting for Social Security and Medicare benefits.
FAQs
What if the employer did not withhold federal income tax?
The employer still reports wages and pays both halves of Social Security and Medicare taxes when cash wages reach the threshold.
Can household employees be included on a business payroll?
A household employee should not be included on business payroll forms unless the employer chooses to report all employees together on a single payroll form. If that method is used, Schedule H is not required to be filed.
Are wages paid to a parent reported on Schedule H?
Wages paid to a parent are generally excluded unless specific conditions apply.
What happens if Schedule H is forgotten when filing Form 1040?
The employer must file Form 1040X with a corrected Schedule H to ensure accurate reporting.
Do cash payments need to be reported to the authorities?
Cash wages, checks, and money orders paid to a household employee must be reported when wage thresholds are met.
For more resources on filing or understanding other IRS forms, visit our Form Summaries and Guides Library.
