Schedule H is a U.S. IRS form. It is attached to an individual federal return, and it has nothing to do with the Australian Taxation Office (ATO). This guide covers worker classification, filing triggers, the taxes reported, where the total lands on Form 1040, records, and where Australian obligations sit separately.
Update note: Final 2027 forms and instructions were not yet published at the time of writing. Figures below come from the latest final IRS guidance and are labelled by year.
Key Takeaways
- Schedule H reports household employment taxes alongside your individual federal return.
- Control over the work decides employee status, not the job title or payment method.
- Check every 2027 threshold, rate and line number against final IRS forms before filing.
- Assess ATO and state or territory payroll obligations separately from Schedule H.
What Is Schedule H for Household Employment Taxes?
Purpose and scope
Schedule H reports Social Security, Medicare and federal unemployment (FUTA) taxes on household wages, plus any federal income tax you withheld. It does not tax your own earnings or a worker's independent business income.
Rely on these IRS documents:
- Schedule H instructions (2025 final; 2026 in draft)
- Form 1040 instructions
- Publication 926, the Household Employer's Tax Guide (2026 final; 2027 draft only)
- General Instructions for Forms W-2 and W-3
The 2027 draft of Publication 926 prints a $3,100 cash-wage threshold and a $192,300 Social Security wage base. Treat these as draft figures, not final.
Household employee or independent contractor?
The IRS looks at the real relationship. Behavioural control (what work is done and how), financial control (payment, reimbursements, tools) and the nature of the relationship all count. No single factor decides it.
A nanny who follows your instructions about care and hours is a household employee. Hiring household employees guidance gives a contrast: a lawn-care operator with a public-facing business, their own tools and their own helpers is not your employee, and neither are those helpers.
Labels do not settle it:
- A contract calling someone a contractor does not bind the IRS.
- A worker from an agency may still be your employee if the agency does not control both the work and how it is done.
- Online platform payments have no household-specific exemption under IRS guidance, so do not assume contractor status.
The 2027 tax-year context
Wages paid during 2027 are reported on the return filed in 2028. Wages paid in 2026 go on the 2026 return, due 15 April 2027. Keep the two years straight when you read any deadline.
Who Needs to File Schedule H for 2027?
Identifying a household employer
Recurring childcare, home care, housekeeping, gardening and personal assistance in a private home can all create an employer relationship. Your control over the work matters more than the worker's invoice, title or preference for cash.
Wage thresholds and filing triggers
The final 2026 benchmarks are the most recent confirmed figures:
| Trigger | 2026 rule |
|---|---|
| Social Security and Medicare | $3,000 or more in cash wages to one employee in the year |
| FUTA | $1,000 or more in total household cash wages in any calendar quarter of 2025 or 2026 |
| Voluntary income-tax withholding | Withholding any amount triggers Schedule H |
The per-employee test applies to each worker separately. The FUTA test combines all your household workers and looks back to the prior year. Quarters run January-March, April-June, July-September and October-December.
Do not carry these figures into 2027. The draft Publication 926 shows $3,100 for 2027, but confirm it in the final Schedule H instructions.
Family and age exceptions
Results differ by tax type:
- Wages to your spouse are excluded from both Social Security/Medicare and FUTA.
- Wages to your child under 21 are excluded from both.
- Wages to your parent are excluded from FUTA and usually from Social Security/Medicare, with a narrow exception tied to caring for a child under 18 or a child needing adult care.
- A worker under 18 at any time in the year is excluded from Social Security/Medicare unless household work is their principal occupation. Students do not meet that exception.
These exclusions do not automatically exempt wages from income tax, though withholding stays optional.
What Taxes and Wages Does Schedule H Cover?
Social Security and Medicare taxes
Final 2026 benchmarks:
| Tax | Employee | Employer |
|---|---|---|
| Social Security | 6.2% | 6.2%, on wages up to $184,500 |
| Medicare | 1.45% | 1.45%, no wage cap |
| Additional Medicare | 0.9% above $200,000 paid by you | None |
You may withhold the employee share from pay, or pay it yourself. The employer share is always yours.
Pay type matters:
- Cash, cheques and money orders count as cash wages
- Food, lodging and clothing provided in kind fall outside household Social Security/Medicare wages, yet may still be income-tax wages at fair market value
- Meals for your convenience and lodging required as a condition of employment can be excluded from income tax
Cash-wage and income-tax tests are separate.
Qualified commuting reimbursements have 2026 limits of $340 a month for parking and $340 a month for transit passes, subject to conditions.
Federal unemployment tax
FUTA is an employer-only tax. Under the 2026 guide it is 6.0% on the first $7,000 per employee, with a credit of up to 5.4% for state unemployment contributions, which can leave 0.6%.
The credit is conditional and tied to state contributions paid by 15 April 2027. States with credit reductions raise your federal bill. California's 2025 multiplier was 1.2%, for example, but confirm the 2027 state figures.
FUTA is separate from employee withholding and is calculated in Part II of Schedule H.
Federal income-tax withholding
Withholding is optional. It applies only if the employee asks, you agree, and the employee gives you a Form W-4. You then withhold each payday using the W-4 and Publication 15-T, and pay the amounts over with your household taxes.
State and local obligations
Schedule H does not replace state duties. Contact your state unemployment agency and check workers' compensation rules. New York shows how much states vary:
- Unemployment registration begins at $500 in cash wages in a quarter.
- Workers' compensation applies at 40+ hours a week with one employer.
- Disability and Paid Family Leave apply at 20+ hours a week.
These are New York rules, not federal thresholds. Check the state where the work happens.
The Australian boundary
Schedule H says nothing about Australian obligations. The ATO has its own rules: household employers may need PAYG withholding registration, and domestic workers can qualify for super guarantee at more than 30 hours a week. Australian residents generally declare worldwide income. Get separate advice on each system.
How to Complete Schedule H and Connect It to Form 1040
Gather information first
Before you start, collect:
- Each employee's legal name, SSN and address
- Payment dates, with cash and noncash wages
- Social Security, Medicare and income tax withheld
- Your own EIN and any state unemployment contributions paid
Keep payroll records, time records, payment confirmations, signed employment terms and copies of Forms W-2, W-3 and W-4. Retain them for at least four years after the filing due date or payment date, whichever is later.
Work through the sections
The 2025 form shows the sequence. Confirm names and line numbers on the 2027 version.
- Questions A-C screen for Social Security/Medicare, withholding and FUTA. The 2025 threshold was $2,800.
- Part I (lines 1-8) calculates Social Security, Medicare and income taxes. Line 9 screens for FUTA.
- Part II (lines 10-24) calculates FUTA through Section A or B.
- Part III (lines 25-27) totals the household employment taxes.
- Part IV collects address and signature where required.
Illustration (fictional numbers only): An employer pays a nanny $20,000 in cash wages.
- Employee share of Social Security and Medicare (7.65%): $1,530
- Employer matching share: $1,530
- If nothing is withheld, the employer owes both shares unless state rules or exceptions apply
- FUTA is added separately
Carry the liability to Form 1040
On the 2025 forms, the Schedule H total (line 8 without FUTA, otherwise line 26) goes to Schedule 2, line 9. Schedule 2, line 21 then goes to Form 1040, line 23.
Adjusted gross income is a different figure. On the 2025 Form 1040 it is calculated on line 11a and carried to page 2 on line 11b. AGI is not your Schedule H liability. Verify all 2027 line numbers before filing.
Payments, deadlines and extensions
Household taxes are not collected through payroll, so you fund them yourself. Increase withholding from your own salary with a W-4, or make Form 1040-ES estimated payments.
Under 2026 rules, estimates are generally needed if at least $1,000 remains due and withholding falls below the smaller of 90% of current tax or 100% of prior-year tax (110% if prior AGI exceeded $150,000). Waiting until you file the return can bring penalties and interest.
Key dates for 2026 taxes:
- Schedule H with the return: 15 April 2027
- Forms W-2 and W-3: 1 February 2027
- Extension (Form 4868): six months to file, not to pay
Standalone Schedule H filing is allowed if you owe no income-tax return, and e-filing is encouraged. Form 1040-NR filers may also attach Schedule H.
Household Employment Records and Common Mistakes
Records and year-end reporting
Keep one payroll file all year. Before filing, reconcile wages paid, employee withholding, employer taxes, payments made and W-2 totals. An EIN (Employer Identification Number) is required for W-2 reporting, and the W-3 transmits paper W-2 Copy A even for one employee.
Frequent compliance errors
- Treating an employee as a contractor because of a label
- Using outdated thresholds
- Confusing the FICA and FUTA triggers
- Omitting taxable noncash wages from income-tax calculations
- Forgetting the employee share
- Missing U.S. state obligations
- Filing late or inaccurate W-2s, or missing SSNs
- Entering the total on the wrong Form 1040 line
You generally remain liable for required taxes you did not withhold or pay. Interest and penalties may apply.
When professional review may help
For Australian residents, foreign investors and globally mobile people with U.S. filing duties, records and reporting can get tangled quickly. VJM Global's U.S. tax compliance and accounting professionals prepare Form 1040 and 1040-NR returns. They can review your records, coordinate U.S.-compliant reporting and flag issues that need specialist advice. This does not replace Australian or U.S. legal advice.
Frequently Asked Questions
What 1040 line is adjusted gross income?
On the 2025 Form 1040, AGI is calculated on line 11a and carried to line 11b. Confirm on the current form, as line numbers change. It is separate from the household employment tax line.
Is Schedule H required for a nanny or housekeeper?
It depends on employee status and the wage or withholding rules, not the job title. Cash wages above the threshold, or voluntary income-tax withholding, trigger it.
What is the household employee wage threshold for 2027?
Use only the figure in the final 2027 Schedule H instructions. The 2027 draft shows $3,100 per employee, separate from the $1,000 quarterly FUTA test.
Do I have to withhold federal income tax from a household employee?
No, unless you agree to an employee's request and receive a Form W-4. Social Security, Medicare, FUTA and state obligations may still apply.
Where does Schedule H go on Form 1040?
It is filed with your individual return. The total flows through Schedule 2, line 9 on 2025 forms, then to Form 1040, line 23. Verify 2027 lines.
Is Schedule H used for Australian household employment?
No. It is a U.S. IRS form and does not replace ATO or Australian employment obligations. Cross-border cases need guidance covering both systems.
