Form 1040 Schedule H (Household Employment
Taxes) – 2015 Checklist
Schedule H for 2015 enables taxpayers who paid cash wages to household employees to report and pay required employment taxes through their individual income tax returns. This form handles Social Security, Medicare, federal income tax withholding, and federal unemployment tax obligations for household workers such as nannies, housekeepers, and caregivers.
Filing Requirements and Wage Thresholds
You must file Schedule H if you meet any one of three separate conditions during 2015
1. Paying cash wages of $1,900 or more to any single household employee during the
2015 calendar year triggers Social Security and Medicare tax obligations and requires filing.
2. Withholding federal income tax from a household employee’s wages at the employee’s request, regardless of the wage amount, creates a Schedule H filing requirement for
2015.
3. Paying total cash wages of $1,000 or more to all household employees in any calendar quarter of 2014 or 2015 triggers federal unemployment tax requirements and a filing obligation.
Meeting any one threshold requires Schedule H filing, even if you do not meet the other conditions. Cash wages include payments made by check or money order but exclude the value of food, lodging, clothing, and other noncash items provided to employees.
Excluded Wages and Family Member Exceptions
Certain wages paid to family members do not count toward household employment tax thresholds and do not require reporting on Schedule H. You exclude wages paid to your spouse, your child under age 21, and your parent in most circumstances.
Wages paid to employees under age 18 at any time during the year are also excluded unless providing household services represents the employee’s principal occupation. Student workers
performing household services are not considered to have household work as their principal occupation.
One important exception applies to wages paid to your parent. You must include these wages if your child living with you is either under age 18 or has a physical or mental condition requiring adult care for at least four continuous weeks in the calendar quarter when services were performed. Additionally, you must be divorced and not remarried, widowed, or married to someone whose condition prevents them from caring for your child during those four weeks.
Form Structure and Tax Calculations
Schedule H contains three main parts with distinct functions
- Part I covers Social Security, Medicare, and federal income taxes and requires reporting
total cash wages subject to these taxes and calculating both employee and employer portions on lines 1 through 8.
- Part II addresses federal unemployment tax obligations and includes two sections based
on your state unemployment contribution status, covering lines 10 through 24.
- Part III calculates total household employment taxes and directs you to transfer the
amounts to the appropriate line on Form 1040 using lines 25 through 27.
The employer’s Social Security number and employer identification number appear in the form’s header section, not within Part I. Employee names, addresses, and Social Security numbers are reported on Form W-2, which you must prepare separately for each household employee meeting the $1,900 wage threshold or for any employee from whom you withheld federal income tax.
Social Security and Medicare Tax Requirements
For 2015, the Social Security tax rate is 6.2 percent for both employees and employers and applies to wages up to the $118,500 wage base limit. The Medicare tax rate is 1.45 percent for both employees and employers, with no wage base limit.
You withhold the employee’s share from wages and pay an equal employer share, resulting in a combined rate of 15.3 percent on qualifying wages. Additional Medicare Tax withholding of 0.9 percent applies only to the employee portion of wages exceeding $200,000 in a calendar year, with no employer share required for this additional amount.
Part I of Schedule H requires you to report all Social Security and Medicare taxes on lines 1 through 8. Line 1 captures total cash wages subject to Social Security tax up to $118,500 per employee, and line 3 captures all cash wages subject to Medicare tax with no limit.
Federal Unemployment Tax Obligations
Federal unemployment tax operates under different rules and thresholds than Social Security and Medicare taxes. The FUTA tax rate is 6.0 percent, but you may claim a credit of up to 5.4 percent for state unemployment contributions paid on time, resulting in a net FUTA tax rate of
0.6 percent.
You pay FUTA tax on the first $7,000 of cash wages paid to each household employee. You pay this tax in full out of your own pocket without deducting it from employee wages.
Part II of Schedule H calculates FUTA tax using either Section A or Section B, depending on your state unemployment contribution circumstances. Section A applies when you paid contributions to only one state, paid all contributions by the filing deadline, and all FUTA-taxable wages were also taxable for state unemployment purposes.
Section B applies when any of these conditions are not met, and it requires detailed reporting of state-specific information, including experience rates and contribution amounts.
Required Forms and Filing Procedures
Step 1: Attach Schedule H to Form 1040, Form 1040NR, Form 1040-SS, or Form 1041 when
filing your 2015 tax return. Form 1041 filers include estates and trusts that qualify as household employers.
Step 2: If you are not required to file any of these returns, file Schedule H by itself by April 18,
2016, along with payment of all household employment taxes owed.
Step 3: Provide Form W-2 to each household employee by February 1, 2016, showing all
wages paid and taxes withheld during 2015.
- Full IRS transcript retrieval (Wage & Income + Account)
- Professional tax form review
- Preparation & filing support
- Tax relief options if you owe the IRS
Step 4: Send Copy A of all Forms W-2, along with Form W-3, to the Social Security
Administration by February 29, 2016, or by March 31, 2016, if filed electronically.
Transfer the total household employment taxes from Schedule H line 26 to Form 1040 line 60a.
This is a distinct line item completely separate from self-employment tax reported elsewhere on
Form 1040.
Business Employee Exclusion
Schedule H cannot be used to report wages paid to employees working in a trade or business you operate. Employees working in retail stores, professional practices, or other business activities require reporting on business employment tax forms such as Form 941, even if those employees perform some work in your home.
Only domestic workers who work in or near your private home are covered by Schedule H. You must maintain a clear separation between household employment and business employment reporting.
Entity Filing Limitations
The form may be filed only by individual taxpayers serving as household employers.
Partnerships and S corporations that file under separate tax identities must use alternative employment tax reporting forms and cannot use Schedule H.
Estates and trusts filing Form 1041 can use Schedule H to report household employment taxes.
The 2015 Schedule H instructions explicitly state that the form should be attached to Form
1040, Form 1040NR, Form 1040-SS, or Form 1041.
If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.
