What Form 1040 Schedule H (2011) Is For
A household employer uses Form 1040 Schedule H (2011) to report household employment taxes for the calendar year. The form allows an individual to pay employment taxes for a household employee who performed household work in or around the home. These obligations apply when an employer pays cash wages that meet the 2011 wage threshold or withholds federal income tax at the employee’s request.
A person must file Schedule H when they paid cash wages of $1,700 or more to any household employee in 2011, paid total cash wages of $1,000 or more in any calendar quarter of 2010 or 2011, or withheld federal income tax from a household employee’s wages. These wages are subject to Social Security tax, Medicare tax, and federal unemployment tax under the Federal Unemployment Tax Act. Schedule H is attached to an individual income tax return, such as Form 1040, Form 1040NR, or Form 1040-SS. Someone who is not required to file a tax return must still file Schedule H on their own when any filing requirement is met.
When You’d Use Schedule H
A household employer uses Schedule H when reporting and paying employment taxes that apply to a household worker. This occurs when wages paid meet wage thresholds or when the employer chooses to withhold federal income tax. It also applies when the employer is required to pay FUTA tax or when the Internal Revenue Service requires a correction to a previously filed tax return.
Late filing occurs when Schedule H was not submitted by the April 17, 2012, deadline for the 2011 tax year. A late filer may be subject to penalties, interest, or both. If Schedule H was initially attached to Form 1040 or another tax return, the employer must file Form 1040X and attach a corrected Schedule H. If Schedule H was filed by itself, the employer must send a corrected version clearly marked “CORRECTED.” An amended filing is required when wages, tax calculations, or withholding amounts were incorrect on the original submission.
Key Rules or Details for 2011
A household employer had to file Schedule H when cash wages reached $1,700 for the year or total cash wages reached $1,000 in any calendar quarter. These rules governed employment taxes, including Social Security, Medicare, federal income tax withheld at the employee’s request, and federal unemployment tax under the Federal Unemployment Tax Act.
FUTA tax applied to the first $7,000 of FUTA taxable wages, with the FUTA tax rate changing midyear and additional liability possible in a credit reduction state. These requirements applied only to household employees and required employers to report household employment taxes on the individual income tax return and pay taxes to the United States Treasury for the calendar year.
For complete details on wage reporting, withholdings, and tax filings, see our guide for Individual Schedules.
Step-by-Step (High-Level)
Step 1: Determine if filing is required
A household employer confirms whether wages paid meet the wage threshold or whether any federal income tax was withheld. Filing is required when the employer paid cash wages of $1,700 or more, paid total cash wages of $1,000 or more in a calendar quarter, or withheld federal income tax at the employee’s request.
Step 2: Obtain an Employer Identification Number
The employer applies for an EIN and uses it on Schedule H and all related tax forms. A Social Security number cannot be used in place of an EIN.
Step 3: Complete Social Security and Medicare sections
The employer calculates Social Security tax and Medicare tax on employees’ wages. These amounts include both the employer’s portion and the employee’s portion if the employer did not withhold taxes during the year.
Step 4: Complete FUTA tax calculations
The employer identifies whether FUTA tax applies based on total cash wages paid. The employer calculates FUTA tax, considers credit reduction states if applicable, and determines the FUTA tax rate for the tax year.
Step 5: Combine household employment taxes
The employer totals Social Security tax, Medicare tax, and FUTA taxes to determine the household employment tax owed. These amounts are added to the individual income tax return.
Step 6: Prepare and file Form W-2 and Form W-3.
The employer prepares Form W-2 for each employee and files Form W-3 with the Social Security Administration.
Step 7: Attach Schedule H to the tax return.
The employer attaches Schedule H to Form 1040 or files Schedule H by itself if no other return is required for the tax year.
Common Mistakes and How to Avoid Them
- Failing to obtain an Employer Identification Number: Apply for an EIN before filing Schedule H to ensure proper household employer reporting.
- Including wages paid to ineligible family members: Review IRS rules to exclude wages that should not be counted when determining filing requirements.
- Missing Form W-2 and Form W-3 deadlines: Track annual due dates and submit wage forms on time to avoid late-filing penalties.
- Not reporting taxes paid on behalf of the employee as wages: Add the employer-paid share of Social Security and Medicare taxes to Form W-2 wages to ensure accurate reporting.
Learn more about how to avoid business tax problems in our guide on How to File and Avoid Penalties.
What Happens After You File
After Schedule H is filed, the Internal Revenue Service adds household employment taxes to the total tax due on the individual income tax return. The United States Treasury processes one combined payment for income taxes, Social Security tax, Medicare tax, and FUTA taxes. The Social Security Administration updates the employee’s earnings record using Form W-2, which affects future benefits. If the IRS identifies a balance due or an overpayment, it issues a notice, refunds the amount, or applies it to the next tax year. If an error is found later, the employer must file an amended return with a corrected Schedule H.
FAQs
Can Schedule H be filed electronically?
Schedule H is filed electronically when submitted with Form 1040. Form W-2 and Form W-3 follow a separate electronic filing process through the Social Security Administration.
What if an employer forgot to withhold the employee’s share of taxes?
The employer may pay the employee’s share out of pocket and report these amounts as additional wages on Form W-2. The employer may also request that the employee reimburse their share of the costs.
Are state unemployment taxes included on Schedule H?
Schedule H reports FUTA taxes only. State unemployment contributions are paid separately to a state unemployment agency.
What happens if Schedule H is filed late?
A late filer may be subject to penalties and interest. Penalties apply for failing to file Form W-2 or Form W-3 on time, even when Schedule H is filed promptly.
Can a household employer file an amended return?
A household employer files Form 1040X with a corrected Schedule H when an amendment is needed. A corrected Schedule H is required when Schedule H was initially filed without any other schedules.
For more resources on filing or understanding other IRS forms, visit our Form Summaries and Guides Library.
