38.3 Filing Schedule H To Report Household Employment Taxes
You must file Schedule H with your 2012 Form 1040 if you paid any one household employee cash wages of $1,800 or more in 2012, or withheld federal income tax during 2012 for a household employee, or paid cash wages totaling $1,000 or more in any calendar quarter during 2011 or 2012 to all household employees. On Schedule H, you report the Social Security and Medicare taxes (38.2), federal income taxes withheld, if any (see below), and federal unemployment taxes (38.4) for your household employees. Total household employment taxes from Schedule H are entered as an “Other tax” on Line 59a of your Form 1040.
If you get an extension to file your return, file Schedule H with the return by the extended due date. If you are not required to file a 2012 tax return, you may file Schedule H by itself by the filing deadline, April 15, 2013. The completed Schedule H should be mailed to the same address that you would use for filing a return, along with a check or money order for the total household employment taxes due.
Withholding federal income taxes.
Income tax withholding is not required for a household employee, but if the employee requests withholding and you agree, the employee must furnish you with a complete Form W-4, Withholding Allowance Certificate. Use the income tax withholding tables in IRS Publication 15 (Circular E, Employer’s Tax Guide), which has detailed instructions.
The earned income credit (EIC).
Copy B of Form W-2 has a notice about the EIC. If you do not give Copy B (or a substitute with similar EIC information) to your household employee by January 31, 2013, you must provide equivalent EIC notice on Notice 797 or your own written equivalent statement by the January 31 deadline. If you agreed to withhold federal income taxes from the employee’s 2012 wages, but a Form W-2 is not required (under the Form W-2 instructions), the EIC notice should be given to the employee by February 7, 2013.
Fringe benefits.
All or part of the value of certain fringe benefits is specifically excluded from a household employee’s taxable wages. If you provide a household employee with lodging or meals on your premises, the benefits are not taxable if furnished for your convenience as a condition of employment. You may also provide tax free transportation assistance to an employee. The tax-free limit for transit passes you give to your household employee, or reimbursements you give for mass transit costs, is $125 per month for 2012. The monthly tax-free limit is $240 for reimbursements you provide for your employee’s parking costs near your home or near a mass transit location from which your employee commutes to your home.
| Eleanor’s total cash wages | $2,200 ($50 × 44 weeks) | |
| Eleanor’s share of employment taxes paid by Nancy: | ||
| Social security tax | $92.40 | ($2,200 × 4.2%) |
| Medicare tax | $31.90 | ($2,200 × 1.45%) |
| Cash wages | $2,200.00 | |
| Eleanor’s share of Social Security tax paid by Nancy | 92.40 | |
| Eleanor’s share of Medicare tax paid by Nancy | 31.90 | |
| Total wages for Eleanor | $2,324.30 |
Employer identification number (EIN).
If you are a household employer, you will need an employer identification number (EIN) to report employment taxes on Schedule H. You can obtain an EIN by completing Form SS-4, Application for an Employer Identification Number. The number can be obtained immediately by phone, over the Internet, or in four weeks if you apply by mail. If you applied for an EIN and are still waiting for it when filing Schedule H, do not enter your Social Security number as a substitute. Instead, enter “Applied For” and the date you applied for the EIN in the space provided for the number on Schedule H.
Caution
Forms W-2 and W-3.
You need an EIN in order to properly file the necessary W-2 and W-3 forms. You must file a Form W-2 for each household employee to whom you paid $1,800 or more of cash wages in 2012 that are subject to Social Security and Medicare (FICA) taxes. You also must file Form W-2 for an employee whose wages were not subject to FICA taxes (38.1) but for whom you withheld income taxes. Furnish copies B, C, and 2 of Form W-2 to your household employee by January 31, 2013.
If you file one or more Forms W-2 for 2012, you must also file a Form W-3, Transmittal of Wage and Tax Statement. You must send Copy A of all Forms W-2 and W-3 to the Social Security Administration (SSA) by February 28, 2013, or by April 1, 2013 if you file electronically.