Introduction
You pay a nanny, a caregiver, or a housekeeper, and suddenly you may owe payroll taxes. Many household employers don't realise this until a worker asks for a W-2. The IRS treats an individual who employs someone at home much like a business owner, even when the "business" is your kitchen.
Schedule H (Form 1040) is the IRS schedule household employers use to report household employment taxes. It attaches to your Form 1040 and carries the total into your return.
This article covers who counts as a household employee, when Schedule H applies, what records to keep, and how the form affects your return. The figures below come from IRS 2026 materials, and some of the forms are still drafts, so check the final instructions and Publication 926 before filing.
Key Takeaways
- Schedule H applies when a household worker is an employee and a filing trigger is met.
- It can cover Social Security, Medicare, FUTA, and voluntary federal income tax withholding.
- Track wages, withholding, your EIN, state unemployment payments, and estimated payments all year.
- Confirm thresholds, rates, and deadlines in the current Schedule H instructions and Publication 926.
Who Needs to File Schedule H?
Employee or Independent Contractor
Control decides the question. If you direct what work is done and how, the worker is your employee, even part-time. Publication 926 gives the example of Peyton Shore, who babysits and does housework four days a week using the household's instructions and supplies. Peyton is an employee.
A plumber is different. IRS Topic 756 says repairmen and plumbers providing independent-contractor services are not household employees. They control how the work is done, usually bring their own tools, and offer services to the public.
Publication 926 lists these household roles:
- Babysitters and nannies
- Housekeepers, maids, and housecleaning workers
- Caretakers, health aides, and private nurses
- Cooks and butlers
- Drivers and yard workers
The Filing Triggers
File Schedule H if you paid wages subject to FICA or FUTA, or withheld any federal income tax. Run three separate tests:
- Social Security and Medicare: Did you pay any one employee $3,000 or more in cash wages in 2026?
- FUTA: Did your total household cash wages reach $1,000 in any quarter of 2025 or 2026?
- Withholding: Did you withhold federal income tax at an employee's request?
One threshold does not replace the others. A worker paid under $3,000 may escape FICA, yet FUTA or withholding can still require the schedule.
Family Members and Young Workers
| Worker | Social Security/Medicare | FUTA |
|---|---|---|
| Your spouse | Excluded | Excluded |
| Your child under 21 | Excluded | Excluded |
| Your parent | Generally excluded, with an exception | Excluded |
| Employee under 18 | Excluded unless household work is their principal occupation (a student's is not) | No general exclusion |
The parent exception requires two conditions:
- Your parent cares for your child under 18 (or a child needing adult care for at least 4 continuous weeks in the quarter)
- You are divorced and unmarried, widowed, or married to a spouse unable to care for the child for those 4 weeks
What Taxes and Information Does Schedule H Cover?
Part I: Social Security, Medicare, and Income Tax
| Tax | 2026 rate | Notes |
|---|---|---|
| Social Security | 6.2% employee, 6.2% employer | Up to $184,500 per employee |
| Medicare | 1.45% employee, 1.45% employer | No wage ceiling |
| Additional Medicare | 0.9% employee only | Withholding starts above $200,000 in wages |
| Federal income tax | Per employee's W-4 | Voluntary |
Schedule H can include both your share and amounts withheld from the employee's pay. You owe the employer share yourself.
Part II: FUTA
FUTA is a federal unemployment tax paid only by the employer. The rate is 6.0% on the first $7,000 of cash wages per employee. A state credit of up to 5.4% can reduce the net rate to 0.6%.
State unemployment contributions are separate payments to your state fund. The full credit depends on paying them on time. Credit-reduction states can also change the amount, so check the IRS credit reduction page for the final list.
How Pay Is Classified
- Cash wages include checks and money orders.
- Food, lodging, clothing, and transit passes are noncash and don't count as Social Security/Medicare cash wages.
- Cash bonuses are wages, and overtime is generally subject to Social Security and Medicare.
- Qualifying commuter reimbursements may be excluded, subject to limits. Excess cash reimbursement is wages.
Records to Keep
- Each payday's date and the cash and noncash wages paid
- Social Security and Medicare withheld or paid for the employee
- Federal income tax withheld
- State employment taxes paid
- Your EIN and each employee's identifying information
- W-2, W-3, W-4, and estimated tax payment records
Keep them for at least 4 years after the return's due date or the tax payment, whichever is later.
How to Complete and File Schedule H With Form 1040
The Form's Structure
The 2026 draft has four parts:
| Part | Contents |
|---|---|
| I | Lines 1-9: Social Security, Medicare, Additional Medicare, income tax withheld, FUTA screening |
| II | Lines 10-24: FUTA, in Section A or B |
| III | Lines 25-27: total household employment taxes |
| IV | Address and signature, for standalone filers |
You answer the opening questions, complete the applicable parts, and total the tax.
In the draft flow, that total moves from Schedule H (line 8 if no FUTA applies, otherwise line 26) to Schedule 2 line 17a, then to Schedule 2 line 21 and Form 1040 line 23. Confirm these line numbers against the final forms.
Worked Example
Publication 926 shows Mary Brown hiring Jane A. Oak, an unrelated adult, on January 31, 2026 for childcare. She pays $70 weekly for 48 weeks, or $3,360. Jane requests no income tax withholding. The Social Security and Medicare amounts are:
- Employee Social Security: $208.32
- Employee Medicare: $48.72
- Employer Social Security: $208.32
- Employer Medicare: $48.72
Mary's Social Security and Medicare total is $514.08. Her FUTA, state unemployment payments, and any estimated payments then adjust the final balance.
Paying the Tax
During the year you can:
- Increase withholding from your own wages with a new W-4
- Increase pension or annuity withholding
- Make Form 1040-ES estimated payments (April 15, June 15, September 15, 2026, and January 15, 2027)
Or you can pay the balance with your return. Paying early doesn't remove the filing requirement.
If you aren't required to file an income tax return but owe household employment taxes, file Schedule H by itself. Draft instructions set that deadline as April 15, 2027.
Related Household Employment Forms, Payments, and State Requirements
Which Form Does What
| Form | Role |
|---|---|
| EIN | Required on household employment forms; can't be replaced by your SSN |
| W-2 | You furnish copies to the employee and file with the SSA by February 1, 2027 |
| W-3 | Transmittal for paper W-2 filings |
| W-4 | Employee's withholding certificate, if they request withholding and you agree |
| I-9 | Employer and employee complete it to verify work eligibility |
| Form 941 | Alternative only if you also have business employees |
W-4 or W-9?
A household employee completes Form W-4 if they want federal income tax withheld and you agree. Form W-9 supplies a payee's taxpayer ID for information reporting, which generally applies to independent contractors. It does not replace the W-4. Classification comes first, so settle that before choosing the form.
State Rules Are Separate
State obligations sit outside Schedule H. In New York, for example, the Department of Labor points household employers to NYS 100 registration and NYS-45 quarterly reporting. Check your own state's labor or tax agency for registration, unemployment insurance, wage reporting, and workers' compensation.
Common Mistakes and When to Seek Professional Help
Frequent Errors
- Treating an employee as a 1099 contractor
- Skipping the EIN
- Missing a filing trigger
- Using a prior-year threshold or form
- Ignoring state unemployment obligations
- Not keeping payroll records
If classification is unclear, file Form SS-8 to request an IRS determination.
What Mistakes Cost
| Issue | Rule |
|---|---|
| Failure to file | 5% of unpaid tax per month, up to 25% |
| Failure to pay | 0.5% per month, up to 25% |
| Interest | 7% annually, compounded daily, for Q4 2026 |
The IRS failure-to-file penalty page explains how these penalties interact. Late or incorrect W-2s can bring separate penalties.
Filing rates remain low. An IRS-hosted Brian Erard study estimated roughly 191,000 Schedule H returns for tax year 2015, about 5.3% compliance.
When to Get Help
Consider a professional if you have:
- Several employees or work in multiple states
- Prior-year corrections to make
- Complicated family-member situations
- High wages or uncertain worker classification
- Cross-border obligations, since the draft instructions allow attachment to Form 1040-NR
VJM Global's U.S.-compliant tax professionals handle Form 1040 and other federal and state filings for cross-border clients. Confirm that your engagement covers household employment matters first.
Frequently Asked Questions
What is Schedule H on Form 1040?
Schedule H is the IRS schedule qualifying household employers use to report household employment taxes. The total flows into your Form 1040.
What are the IRS rules for household employees?
A worker is an employee if you control what is done and how. Separate FICA, FUTA, and withholding tests apply, along with family and age exceptions. Check current IRS guidance.
Do employees fill out W-4 or W-9?
An employee completes a W-4 if they want income tax withheld and you agree. A W-9 generally relates to independent contractors' taxpayer information.
Do I need to file Schedule H if I paid below the wage threshold?
Possibly. Under $3,000 avoids FICA for that worker, but the quarterly FUTA test or any federal income tax withheld can still require filing.
Can Schedule H be filed separately from Form 1040?
Normally it attaches to Form 1040. If you aren't required to file an income tax return but owe household taxes, you file it alone. Check the current instructions.
What information do I need to complete Schedule H?
Gather wage totals, withholding records, your EIN, employee SSNs, state unemployment payments, and estimated payments. Use the current tax-year form and instructions.
