Last Updated : January 14, 2009
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SchH

Schedule H

Household Employment Taxes

WHO NEEDS TO FILE SCHEDULE H ?
Answer to the questions at the top of the form to see which sections should be completed. Depending upon the answers , the taxpayer may find out that he needs to complete lines A 1 through 4 , 6 , 8 , and 9 .

The taxpayer had a household employee if he or she hired someone to do household work and was able to control what work the person did and how he or she did it. Household Work is work done in or around the home. some Examples are babysitters, drivers, nannies, private nurses, cleaning people, etc.
Note: If the government agency files Schedule H for the worker, the taxpayer does not need to file it.

CASH WAGES:
Cash wages include wages paid by checks, money orders, etc. Cash wages do not include the value of food, lodging , clothing or other non cash items given to a household employee.

CALENDER QUARTER:
A calendar quarter is January through March, April through June, July through September, or October through December.
Select the checkbox on the top of the form for taxpayer or spouse.
Note: The $1500 per year test applies only to line A.

Information from schedule H flows to page 2 of form 1040, Other Taxes section.

WHO NEEDS TO FILE FORM W-2 AND FORM W-3 ?
A person must file Form W-2 for each household employee to whom he or she paid $1500 or more of cash wages in 2007 that are subject to social security and Medicare taxes.If the wages are not subject to these taxes but the person withheld federal income tax from the wages of any household employee, he or she must file FORM W-2 for that employee.

PART - I SOCIAL SECURITY, MEDICARE AND INCOME TAX

For social security, the tax rate is 6.2% each for a taxpayer and the employee. For medicare, the rate is 1.45% each. If the taxpayer did not deduct the employee's share from his or her wages, the taxpayer must pay the employee's share from his or her share.

If the total of any employees wages exceeds $97500 , the taxpayer is needed to recalculate and enter the correct amount.

$1500 TEST:
Any household employee to whom the taxpayer paid cash wages of $1500 or more in 2007 meets this test. The test applies to cash wages paid in 2007 regardless of when the wages were earned.
For more information refer Publication 926.

Line 1:
Enter on this line the total of cash wages paid in 2007 to each household employee who meets the $1500 test.

Line 2:
The program multiplies the amount on line 1 by 12.4% and enters the result on this line.

Line 3:
Enter on this line the total of cash wages paid to each employee in 2007.

Line 4:
The program multiplies the amount on line 3 by 2.9% and enters the result on this line.

Line 5:
Enter on line 5 any federal income tax the taxpayer withheld from the wages he paid to his household employees in 2007.

Line 6:
The program adds line 2 , line 4 and line 5 and enters the result on this line.

Line 7:
Enter on this line , any advance EIC payments he made to his household employees in 2007.

Line 8:
The program subtracts line 7 from line 6 and enters the result on this line.

Line 9:
Check the applicable checkbox on line 9 and further proceed as per instructions given for checkboxes.
If checkbox YEs is checked then the taxpayer should go to schedule H page-2 and complete the further details required by it. If the taxpayer checks the checkbox NO then he need not complete page-2 of schedule H and the program reports the amount on line 8 on FORM 1040 line 62 or FORM 1040NR line 57 as appropriate.

PART - II FEDERAL UNEMPLOYMENT TAX (FUTA):

FUTA tax , with state unemployment systems, provides for payments of unemployment compensation to workers who have lost their jobs. Most Employers pay both a federal and state unemployment tax. The FUTA tax rate is 6.2%. The employer should not deduct the FUTA tax from the employees wages but should pay from his own funds.

Line 10 through 12:
The taxpayer should answer the questions on lines 10 through 12 to see if he needs to complete SECTION A or SECTION B.
If the taxpayer checks the YES checkbox on all lines above he need to complete section A.
If the taxpayer checks the NO checkbox on any of the lines above , he needs to complete section B.

Line 13:
Enter on this line the two letter abbreviation of the name of the state to which he paid unemployment contributions.

Line 14:
Enter your state reporting number.If the taxpayer does not have it then he should contact the state's unemployment tax agency.

Line 15:
Enter the total of contributions the taxpayer paid to his state unemployment fund for 2007. If he did not have to make contributions because his state gave a zero percent experience rate, enter 0% on line 15.

Line 16:
Enter the total of cash wages the taxpayer paid in 2006 to each household employee, including employees paid less than $1000. However, do not include cash wages paid in 2007 to any of the following individuals.

  • Your spouse
  • Your child who was under age 21.
  • Your parent.

If you paid any household employee more than $7000 in 2007, include on line 16 only the first $7000 of that employee's cash wages.

Line 17:
The program multiplies the amount on line 16 by 0.008 and entry the result on this line.

Line 18:
Complete all columns that apply. If you do not, you will not get a credit. The state will provide the experience rate. If the taxpayer does not the rate, he can get it from the unemployment tax agency.

The taxpayer must complete columns a, b , c, and i even if he was not given an experience rate. If he was given an experience rate of 5.4% or higher , then he must complete columns d and e.If he was given a rate of less than 5.4% then he must complete all columns.
For more details refer instructions.

Line 19:
The program adds the amounts entered in column (H) and (i) separately and enters the total in separate fields provided.

Line 20:
The program adds the amounts on line 19 and enters the total on this line.

Line 21:
Enter on this line the total wages which are subject to FUTA tax.

Line 22:
The program multiplies line 21 by 6.2% tax rate and enters the result on this line.

Line 23:
The program multiplies line 21 by 5.4% rate and enters the result on this line.

Line 24:
The program calculates the lower of line 20 or line 23 and enters the result on this line.

Line 25:
The program subtracts line 24 amount from line 22 and enters the result on this line.

PART - III TOTAL HOUSEHOLD EMPLOYMENT TAXES:

Line 26:
The program enters the amount from schedule H page-1 line 8. If there is no entry then it is zero.

Line 27:
If section A is completed then the program adds line 17 and line 26 and enters the result on this line.
If section B is completed then the program adds line 25 and line 26 and enters the result on this line.

Line 28:
The program checks the checkbox YES if form 1040 is present and enters the amount on line 62 of form 1040 pg-2.
The program checks the checkbox NO if form 1040 is not present and requires to complete the details of PART - IV as given.

PART -IV ADDRESS AND SIGNATURE:

The taxpayer is required to enter this part manually with details as needed if he check the checkbox NO on line 28.





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