Schedule H (Form 1040) is the IRS schedule used to calculate and report household employment taxes. It is generally attached to your Form 1040. For 2026, the trigger is simple to state: pay a household employee $3,000 or more in covered cash wages and Social Security and Medicare taxes apply, according to IRS Publication 926.
This guide covers worker classification, filing triggers, the taxes involved, records, related forms, state rules, the filing process and common mistakes. Check every threshold, rate and deadline against the current IRS instructions and Publication 926 before filing.
Key Takeaways
- Schedule H generally applies when your household worker is an employee and a federal filing trigger is met.
- Classification turns on your control over what work is done and how, not on job title or payment method.
- It can cover Social Security, Medicare, FUTA and any agreed income tax withholding.
- State obligations are separate and are not satisfied by Schedule H.
- Keep year-round records of wages, withholding, EIN, employee details and tax payments.
Who Needs to File Schedule H?
Employee or Independent Contractor
The IRS uses a control test. A worker is generally your employee if you control what work is done and how it is done. Hiring through an agency, paying by the job or working part-time does not change that.
Household work means work in or around your home. Typical employees include:
- Nannies and babysitters
- Caregivers, health aides and private nurses
- Housekeepers, housecleaners and cooks
- Drivers
- Yard workers
Independent contractors are different. Plumbers, electricians and other tradespeople run their own business, choose their methods and serve several customers. So does a lawn-care operator who serves the public, brings their own tools and directs their own helpers.
A babysitter who works four days a week doing light housework under your instructions, by contrast, is a household employee.
Filing Triggers
Three separate tests can require Schedule H. Meeting one is enough, even if you miss the others.
- Social Security and Medicare test: you pay any one employee $3,000 or more in cash wages during 2026.
- FUTA test: you pay total household cash wages of $1,000 or more in any calendar quarter of 2025 or 2026.
- Withholding test: you actually withhold federal income tax at the employee's request, with your agreement.
Once an employee reaches $3,000, all of that year's cash wages count, not just the excess. Below $3,000, neither Social Security nor Medicare applies for that worker, though FUTA or actual income tax withholding can still bring Schedule H into play.
Family Members and Young Workers
Some wages are excluded, but not as a blanket rule. For Social Security and Medicare, wages paid to these people generally do not count:
- Your spouse
- Your child under 21
- Your parent, unless the childcare exception below applies
- A worker under 18 at any time in the year, unless household work is their principal occupation (a student's household work is not treated as principal occupation)
For FUTA, the exclusions cover your spouse, your child under 21 and your parent. The under-18 exclusion is not among them.
Parent wages count for Social Security and Medicare only when both conditions are met:
- The parent cares for your child under 18, or a child who needs an adult's personal care for at least four continuous weeks in the quarter.
- You are divorced and not remarried, widowed, or living with a spouse whose condition prevents childcare for at least four continuous weeks in that quarter.
If you have several employees, test each one separately for Social Security and Medicare. The FUTA test uses your combined household wages.
What Taxes and Information Does Schedule H Cover?
Part I: Social Security, Medicare and Federal Income Tax Withholding
Schedule H calculates both your share and the employee's share of Social Security and Medicare. The employee's share is normally withheld from pay, though you may instead pay it from your own funds.
| Federal tax | Employee | Employer | 2026 limit |
|---|---|---|---|
| Social Security | 6.2% | 6.2% | $184,500 wage base per employee |
| Medicare | 1.45% | 1.45% | No wage base limit |
| Additional Medicare | 0.9% | None | You withhold on wages above $200,000 |
| FUTA | None | 6.0% before credit | First $7,000 per employee |
Additional Medicare withholding begins in the pay period when wages pass $200,000. The employee's own liability uses filing-status thresholds ($250,000 married filing jointly, $125,000 married filing separately, $200,000 otherwise), which can differ from what you withhold.
Federal income tax withholding is not automatic for household employees. It happens only if the employee asks and you agree. The employee gives you a Form W-4, and the amounts withheld are reported on Schedule H.
Part II: Federal Unemployment Tax
FUTA is the employer's tax. The employee pays nothing. The rate is 6.0% on the first $7,000 of each employee's wages, but a state unemployment credit of up to 5.4% usually brings the net rate to 0.6%.
The full credit depends on paying all required state contributions on time. For 2026, that means by April 15, 2027. Late payments earn a credit limited to 90% of the otherwise allowable amount.
Some states carry a credit reduction when they owe the federal government unemployment loans, so check the Department of Labor's credit reduction page for the year you file.
State unemployment payments are not reported on Schedule H. They go to your state agency, but timely payment affects your federal credit.
Wages and Records Used in the Calculation
Not every payment is treated the same way. Under Publication 926 and related guidance:
| Payment | Treatment |
|---|---|
| Cash wages (checks, money orders, cash in place of food or lodging) | Count for all taxes |
| Bonuses and overtime | Generally subject to both shares of Social Security and Medicare |
| Food, lodging, clothing, transit passes | Not cash wages; not Social Security or Medicare wages |
| Meals at your home for your convenience | Excluded from income tax withholding |
| Transit and parking benefits | 2026 monthly exclusions of $340 each |
| Expense reimbursements | Not wages only under an accountable plan, with substantiation and return of excess advances |
Keep these records for at least four years after the return due date or the date you pay the tax, whichever is later:
- Employee name, address and Social Security number
- Each pay date, with cash and noncash wages
- Employee Social Security, Medicare and federal income tax amounts
- State employment taxes paid
- Your EIN and copies of Forms W-2, W-3 and W-4
- A copy of Schedule H and your estimated tax payments
How to Complete and File Schedule H With Form 1040
Understand the Form's Structure
Always use the final form and instructions for the tax year you are filing. Do not rely on draft versions or last year's line numbers.
The basic workflow is:
- Answer the questions that determine whether you must complete each part.
- Enter wages and any federal income tax withheld.
- Calculate Social Security and Medicare, then FUTA, if they apply.
- Apply eligible credits, including the state unemployment credit.
- Total the household employment tax.
Information to Gather Before Filing
Have these ready before you start:
- Your name and taxpayer identification number
- Your EIN, a nine-digit number from Form SS-4, which is not your SSN
- Each employee's Social Security number
- Total wages paid and any tax withheld
- State unemployment contributions paid
- Estimated tax payments made
You can cover the tax during the year in three ways:
- Raise your own wage withholding using Form W-4
- Adjust pension or annuity withholding
- Make Form 1040-ES estimated payments
For 2026, the installments fall on April 15, June 15, September 15, and January 15, 2027. Otherwise you pay with your return, and an underpayment penalty can apply if you paid too little during the year.
How Schedule H Flows Into Form 1040
The Schedule H total flows into the additional taxes section of your federal return, via Schedule 2. Confirm the current line numbers on the final forms.
Schedule H is generally filed with Form 1040 by April 15, 2027 for the 2026 tax year. It can also accompany Form 1040-NR for nonresident filers. If you are not otherwise required to file an income tax return, file Schedule H by itself.
Related deadlines for the same year:
- Employee W-2s due to each worker by February 1, 2027
- Forms W-2 and W-3 due to the Social Security Administration the same day
Official Example
This hypothetical comes from Publication 926 (2026). An unrelated worker over 18 provides childcare for $100 every Friday, with annual cash wages expected to reach $3,000 or more. The employer pays the worker's Social Security and Medicare share instead of withholding it.
For each payment:
- Social Security and Medicare wages are $100.
- Total tax is $15.30: $7.65 employee share plus $7.65 employer share.
- Each share is $6.20 Social Security plus $1.45 Medicare.
- Income tax wages are $107.65, because the employer-paid employee share counts as extra wages for income tax purposes.
Your final Schedule H total then accounts for FUTA, state payments, and estimated payments. Use the current Publication 926 worked example for the full line-by-line walkthrough.
Related Household Employment Forms, Payments and State Requirements
Which Form Does What?
| Form | Purpose |
|---|---|
| SS-4 | Application for your EIN |
| W-2 | Wage and tax statement for the employee |
| W-3 | Transmittal sent with W-2s to the SSA |
| W-4 | Employee's withholding certificate, used for agreed federal income tax withholding |
| I-9 | Employment eligibility verification, generally needed for regular domestic workers |
Sporadic, irregular or intermittent domestic work is excepted from Form I-9.
Do not confuse W-4 with W-9. A W-9 collects the name and taxpayer number of an independent contractor. It is not a withholding certificate, and it does not determine whether someone is a contractor or an employee.
State Rules Are Separate
Filing Schedule H does not replace anything you owe your state. Depending on where you live, obligations may include:
- Employer registration and state unemployment insurance
- State wage reporting and income tax withholding
- Workers' compensation coverage
- Paid family or medical leave contributions
- Other labour rules, such as minimum wage
Rules vary widely. New York, for example, can require disability and Paid Family Leave coverage for qualifying domestic workers, but that is not a universal rule. Contact your own state's unemployment, workers' compensation and labour agencies. The Department of Labor lists state unemployment contacts.
Common Mistakes and When to Seek Professional Help
Frequent Errors
- Treating an employee as a contractor
- Not obtaining an EIN
- Using an outdated form or threshold
- Overlooking a filing trigger, such as the quarterly FUTA test
- Failing to track wages by quarter
- Misapplying family-member exceptions
- Ignoring state obligations
The consequences are practical. Late filing draws a penalty of 5% of unpaid tax per month or part-month, capped at 25%, per the IRS failure to file penalty rules. Late payment generally adds 0.5% per month, also capped at 25%. Interest compounds daily at rates reset quarterly.
W-2 errors carry their own penalties. For 2026 forms filed in 2027, per-return penalties run from $60 to $340 depending on timing, and intentional disregard starts at $690. Reasonable cause relief is available in some circumstances.
When to Get Professional Help
Consider a tax professional if you have:
- Several household employees
- Employees in more than one state
- Prior-year corrections to make
- Unclear classification or a family-member arrangement
- High wages or substantial federal withholding
- Nonresident or cross-border filing circumstances
- Doubts about state compliance
Australian residents who own a US home, and US taxpayers living in Australia who employ household help, can face Form 1040 or 1040-NR obligations alongside Australian tax rules.
VJM Global's US-compliant tax professionals can assist with Form 1040 and related federal or state tax compliance for eligible clients, subject to confirming that household employment matters fall within the engagement.
Even with a professional, read the current IRS instructions, Publication 926 and your state agency guidance. A good adviser validates classification, calculations, records and filing completeness. You remain the employer.
Frequently Asked Questions
Who is required to file Schedule H?
A household employer generally files when a worker is an employee and a filing trigger is met: the Social Security and Medicare wage test, the FUTA test, or actual federal income tax withholding. Thresholds and exceptions vary by tax year.
What is Schedule H on Form 1040?
Schedule H is the IRS form for reporting household employment taxes. It is generally attached to your Form 1040, and its total flows into your return's additional taxes.
What taxes are reported on Schedule H?
Social Security, Medicare, federal unemployment tax and any federal income tax withheld at the employee's request. State unemployment taxes are reported to your state, not on Schedule H.
How do I complete and file Schedule H with Form 1040?
Gather your EIN, employee SSNs, total wages, withholding, state unemployment payments and estimated payments. Complete the current-year schedule, attach it to Form 1040 and follow Publication 926.
Do I need to file Schedule H if I paid a household employee below the wage threshold?
Possibly. Falling under the $3,000 Social Security and Medicare threshold does not end the analysis if the FUTA quarterly test is met or you withheld federal income tax.
Can Schedule H be filed separately from Form 1040?
Yes, in one case. If you are not otherwise required to file an income tax return but owe household employment taxes, you file Schedule H by itself. Otherwise it is attached to your return.
