Tax day is rapidly approaching, and as taxpayers scramble to assemble tax forms, receipts, and other important documentation for 2021, individuals who employed a nanny or other household employee should not forget their Schedule H.
The Schedule H is a form for household employers to report the federal payroll tax liability due to having an employee. Some household employers get confused and prepare quarterly 941 filings and year-end 940 or 944 forms – these forms are not correct for household employers and are intended for businesses.
A household employee is not limited to nannies and caregivers. Gardeners, chefs, chauffeurs, private nurses, babysitters, housekeepers, house managers, and private aides are all examples of in-home workers who may be household employees as defined by the IRS which means they should receive a W-2 from their employer and the employer should include a Schedule H with their 1040 tax return.
The Schedule H should be used by employers of household employees to report the employer and employee federal payroll taxes for the year. The federal taxes include the employer/employee portions of Social Security and Medicare, the employer’s Federal unemployment taxes, and the employee’s Federal income taxes. If federal taxes were not paid or over/under paid, they can be reconciled through the Schedule H on the 1040. These estimated payments are remitted quarterly on the IRS payment schedule, and NannyChex makes these estimated federal payments for our clients as part of our quarterly tax filing process. There may be penalties and interest assessed by the IRS for not making federal estimated tax payments during the year – consult NannyChex or your tax professional for more information.
The Schedule H is a form that is provided to all NannyChex clients who employ household workers and meet the IRS requirements for preparing the form. If you employed a household employee in 2021 and have Schedule H questions or if you want to avoid the administrative headaches of preparing a Schedule H yourself, please contact us – we’re here to help!