Like any other employer-employee relationship, you and the employee would need to fill out the I-9 form, verifying that the employee is legally eligible to work in the United States. You, as an employer, would need to have an Employer Identification Number (EIN). You would need the person’s name and Social Security number, and would complete a Form W-2 to report their wages and taxes withheld for the year. Withholding of federal income tax is not required for household employees, but normally you need to withhold Social Security and Medicare taxes, and also pay the employer (matching) portion.
If you paid any one or more household employees wages of $1,400 or more, or withheld federal income tax for a household employee, you must file Schedule H. Schedule H is also required if you paid at least $1,000 in any one calendar quarter of the prior year to all of your household employees. Schedule H would be filed with your income tax return, or by itself if you are not required to file a return. You must still file by the filing deadline, even if filing Schedule H by itself.
Schedule H is not required to be filed if the household employee is your husband or wife, your child under 21 years old, your parent, or anyone less than 18 years old if household services is not his or her main profession.
Fortunately for those with household employees, Schedule H is a very simple form. It reports household employee wages subject to Social Security and Medicare taxes, calculates the tax amount, lists any federal income tax withheld, and subtracts any advance Earned Income Credit payments, to arrive at net taxes due. This tax amount is then carried to your Form 1040 to figure your total tax liability.
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