Schedule H 2019 Household Employment Tax Guide

Household Employment Taxes 2019 Checklist

Schedule H applies to employers of household workers and integrates Social Security,

Medicare, and federal unemployment tax reporting into the individual income tax return. This form becomes required when household employee wages meet or exceed the threshold specified in the 2019 instructions.

Filing Requirements and Thresholds

You must file Schedule H if you paid any one household employee cash wages of $2,100 or more in 2019. Cash wages include payments made by check, money order, or any form of payment other than noncash items such as food, lodging, or clothing.

The $2,100 threshold determines whether you must report and pay Social Security and

Medicare taxes on all wages paid to that employee. Filing also becomes mandatory if you paid total cash wages of $1,000 or more in any calendar quarter of 2018 or 2019 to all household employees.

Employer Identification Requirements

The top of Schedule H requires your name, Social Security number, and Employer Identification

Number. If you have household employees, you will need an EIN to file Schedule H.

You may apply for an EIN online at IRS.gov/EIN, or you may submit Form SS-4 by fax or mail to the IRS. Do not use your Social Security number in place of an EIN when filing household employment taxes.

Part I: Social Security, Medicare, and Federal Income

Taxes

Part I of Schedule H covers lines 1 through 9 and addresses Social Security, Medicare, and federal income tax reporting. For 2019, the combined Social Security tax rate totals 12.4%, representing 6.2% each for the employee and employer.

Social Security Tax Calculation

Schedule H line 2 instructs you to multiply the total cash wages subject to Social Security tax by

12.4%. The 2019 Social Security wage base limit is $132,900, so you include on line 1 only the first $132,900 of cash wages paid to any household employee who earned more than that amount.

Medicare Tax Calculation

The Medicare tax rate totals 2.9%, representing 1.45% each for the employee and employer. No wage base limit applies to Medicare tax, and you must calculate Medicare tax on all cash wages paid to household employees in 2019.

Line 4 requires you to multiply the amount on line 3 by 2.9%. Additional Medicare Tax applies at

0.9% to wages exceeding $200,000 in a calendar year, and you must withhold this amount from employee wages.

Part II: Federal Unemployment Tax

Part II addresses the Federal Unemployment Tax, which provides funding for unemployment compensation payments to workers who have lost their jobs. The FUTA tax rate is 6.0%, and you may claim a credit of up to 5.4% against the FUTA tax if you paid all required contributions to your state unemployment fund by April 15, 2020.

FUTA Tax Requirements

You owe FUTA tax if you paid total cash wages of $1,000 or more in any calendar quarter of

2018 or 2019 to household employees. The FUTA wage base is $7,000 per employee per year, so you include only the first $7,000 of each employee’s cash wages when calculating FUTA tax.

FUTA tax must be paid out of pocket; it cannot be collected or subtracted from your employee's pay. Section A of Part II provides a simplified calculation method for household employers who paid unemployment contributions to only one state.

Section B requires detailed reporting by state and experience rate for household employers who do not qualify for Section A. Calendar year taxpayers who had no household employees in 2019 do not need to complete this form for the 2019 tax year.

Form W-2 Filing Requirements

You must file Form W-2 for each household employee to whom you paid $2,100 or more of cash wages in 2019. Even if wages fall below the $2,100 threshold, you must file Form W-2 if you withheld federal income tax from that employee’s wages.

W-2 Distribution Deadlines

Provide Copy B, Copy C, and Copy 2 of Form W-2 to each employee by January 31, 2020.

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

Employee information, such as name and Social Security number, appears on Form W-2, not on

Schedule H itself. The Social Security Administration generates Form W-3 automatically when you file Forms W-2 electronically through the SSA’s Form W-2 Online service.

Recordkeeping and Retention Requirements

Keep employment tax records for at least four years after the date that the tax becomes due or