If you are a household employer who owes household employment tax, the IRS requires you to fill out Schedule H and include it with your 1040 when filing your annual income tax return. If you must fill out Schedule H, you’ll also have to fill out form W-2 to report your household employee’s wages and tax withholding and form W-3 to report your employee’s Social Security wages and withholding to the Social Security Administration. You pay the income and employment taxes that you should have withheld from your household employee’s pay when you file your 1040.
The IRS considers you a household employer if you hire someone full-time or part-time, directly or through an agency, to do household work. They can be considered a household employee whether they are paid an hourly wage, an annual salary or on a per-job basis. The IRS’s list of household workers includes but is not limited to babysitters, nannies, caretakers, housekeepers, domestic workers, drivers, home health aides, private nurses and yard workers. Just because you hire someone to perform this type of work does not automatically make them your household employee, however. The worker is considered an employee if you provide their equipment and supplies and they follow your specific instructions about how to perform the work. The worker is considered an independent contractor if they provide their own equipment and supplies and offer services to the general public. Someone who performs household work can also be employed by an agency that is responsible for that worker’s taxes.
Here are some examples of workers that would be considered household employees, for which you could be required to file Schedule H:
- Kate lives in your pool house and provides babysitting services for your children five days a week between the time the school bus drops them off and the time you return home from work.
- George comes to your 10-acre property Monday through Saturday and uses your riding lawnmower and other tools to take care of your land.