A:

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.
RELATED FAQS
  1. How safe are money market accounts?

    Learn the difference between a money market account and a money market fund. Both savings vehicles are relatively safe, but ... Read Answer >>
  2. Why is Belize considered a tax haven?

    Explore the factors that make Belize one of the most modern and corporate-friendly tax havens in the world, including its ... Read Answer >>
  3. What is an assumable mortgage?

    The purchase of a home is a very expensive undertaking and usually requires some form of financing to make the purchase possible. ... Read Answer >>
  4. Why would a homebuyer need to take out PMI (private mortgage insurance)?

    Learn why some home buyers are required to take out private mortgage insurance (PMI), and how it affects the total monthly ... Read Answer >>
  5. Why does the majority of my mortgage payment start out as interest and gradually ...

    When you make a mortgage payment, the amount paid is a combination of an interest charge and principal repayment. Over the ... Read Answer >>
  6. What are the disadvantages of a Roth IRA?

    Get informed about Roth IRAs, which have a few disadvantages, including limited access to funds and contribution limits based ... Read Answer >>
Related Articles
  1. Forex

    Global Utilities: Exploring Revenue Trends & Fundamentals

    Analyze global revenue exposure in the utilities sector to learn about the impact of currency, regulation and economic growth on geographic contributions.
  2. Home & Auto

    4 Alternatives to a Traditional Mortgage

    If you can't qualify for or don't want a traditional mortgage, one of these options might be right for you.
  3. Home & Auto

    Understanding Mortgage Impound Accounts

    Home buyers with low down payments may get stuck with higher mortgage payments. Find out what you get for the extra money.
  4. Investing

    Municipal Bonds Offer Something More for Everyone

    Are municipal bonds really for me? The popular perception is that tax-exempt income only benefits those investors in the highest tax brackets.
  5. Retirement

    5 Top Alternatives to a Reverse Mortgage

    If you have substantial home equity and don't want to do a reverse mortgage to tap it for retirement expenses, cost out these viable alternatives.
  6. Credit & Loans

    What Is an Alt-A Mortgage?

    Called "liar loans" for their low documentation requirements, Alt-A mortgages were hot until the subprime crisis. Now Wall Street wants to bring them back.
  7. Home & Auto

    Understanding Mortgage-Backed Securities

    Find out the meaning of this popular asset-backed security and its benefits for banks and investors.
  8. Investing

    Berkshire Hathaway Stock: Capital Structure Analysis (BRK.A)

    Review the capital structure of Berkshire Hathaway, and understand how equity and debt capitalization and enterprise value may interact with each other.
  9. How the Future of Driverless Trucks Impacts the Global Economy

    A successful cross-border trip of a convoy of self-driving trucks across Europe gives insight to a future of autonomous vehicles to replace human drivers.
  10. Markets

    Chart of the Week: Why It’s Time for Caution?

    This week’s chart helps illustrate why we’re taking a more cautious view of global equities over the near term.
RELATED TERMS
  1. Primary Mortgage Market

    The market where borrowers and mortgage originators come together ...
  2. 100% Mortgage

    A mortgage loan in which the borrower receives a loan amount ...
  3. Reverse Mortgage

    A type of mortgage in which a homeowner can borrow money against ...
  4. Mortgage Originator

    An institution or individual that works with a borrower to complete ...
  5. Secondary Mortgage Market

    The market where mortgage loans and servicing rights are bought ...
  6. Mortgage Pool

    A group of mortgages held in trust as collateral for the issuance ...
Trading Center