What Is Schedule H?

Schedule H (Form 1040) is a tax form used by individuals who hire household employees—such as nannies, housekeepers, gardeners, or in-home caregivers—to report and pay Social Security, Medicare, federal unemployment (FUTA), and any withheld federal income taxes. This schedule is attached to the employer’s individual income tax return (Form 1040, 1040-SR, 1040-NR, or 1041 for estates and trusts).

The purpose of Schedule H is to ensure that household employers meet their tax obligations under the Federal Insurance Contributions Act (FICA) and the Federal Unemployment Tax Act (FUTA), among other regulations that apply to domestic employment.

Who Must File

You must file Schedule H if you paid a household employee cash wages that meet or exceed a specific threshold for the year—$2,800 for Social Security and Medicare taxes in 2025. You also need to file if you withheld federal income tax at the employee’s request or if you paid $1,000 or more in any calendar quarter for FUTA tax purposes.

It's important to distinguish between an employee and an independent contractor. The IRS generally considers workers to be employees if the employer controls not only the work performed but how it is done. For instance, a nanny working set hours in your home is likely an employee, while a contractor who runs their own landscaping business is not.

What Taxes Are Reported

Schedule H covers several categories of employment taxes for household workers:

• Social Security and Medicare (FICA) taxes: These are shared by the employer and employee. For 2024, each pays 6.2% for Social Security and 1.45% for Medicare, totaling 15.3%.
• Federal Unemployment Tax (FUTA): This tax is paid only by the employer and helps fund unemployment benefits. The FUTA tax rate is 6% on the first $7,000 of wages per employee, though employers may be eligible for a credit of up to 5.4% if state unemployment taxes are paid.
• Federal Income Tax Withholding: Not required unless requested by the employee and agreed upon by the employer. If withheld, it must be reported on Schedule H.

Some household employers may also need to pay state employment taxes, including state unemployment and disability insurance. These are not reported on Schedule H but must still be managed through state agencies.

Filing Process and Requirements

To file Schedule H, the employer must first obtain an Employer Identification Number (EIN) from the IRS. This number is distinct from a Social Security number and is used to track employment tax responsibilities.

On Schedule H, employers provide detailed wage information for each household employee, calculate the total employment taxes owed, and include those figures as part of their overall tax liability on their personal return. If the total tax owed is significant, estimated tax payments or additional withholding may be needed to avoid underpayment penalties.

In addition to filing Schedule H, the employer must also provide Form W-2 to each household employee and file copies with the Social Security Administration using Form W-3.

Penalties and Compliance Considerations

Failure to file Schedule H when required can result in penalties, interest, and back taxes. Misclassifying an employee as an independent contractor or failing to withhold and pay proper taxes can also lead to legal and financial consequences.

The IRS has made efforts to streamline household employment tax compliance, but it remains the responsibility of the employer to stay informed about threshold changes and filing deadlines. In many cases, household employers use payroll services or software to handle these obligations accurately and on time.

Special Cases and Exemptions

Not all household employment arrangements require filing Schedule H. For example, wages paid to a spouse, a child under the age of 21, or a parent (under certain conditions) are not subject to Social Security and Medicare taxes. Likewise, individuals who hire household help through an agency, where the agency controls the employment relationship, may not be considered the actual employer.

Some employers may also qualify for tax credits for dependent care expenses, and the wages reported on Schedule H could factor into those calculations. However, Schedule H itself is specifically for the reporting of employment taxes, not for claiming credits.

The Bottom Line

Schedule H (Form 1040) is a key reporting tool for individuals who employ household workers. It consolidates the employer’s responsibilities for Social Security, Medicare, FUTA, and federal income tax withholding into a single schedule attached to their income tax return. Understanding when and how to file Schedule H helps ensure compliance with tax laws and avoids potential penalties. While the process can be complex, careful recordkeeping and use of professional assistance or payroll software can simplify the process for household employers.