Vision Payroll

This week’s question comes from John, a homeowner. I read about the need for household employers to file Schedule H. I own a home and hire people to do work there, but am not sure if I need to file Schedule H. How do I know if someone is a household employee? Answer: According to the Internal Revenue Service (IRS), “If you hired someone to do household work and you were able to control what work he or she did and how he or she did it, you had a household employee. This is true even if you gave the employee freedom of action. What matters is that you had the right to control the details of how the work was done.” The IRS also lists the following types of workers who commonly do household work:

• Babysitters
• Caretakers
• Cleaning People
• Drivers
• Health Aides
• Housekeepers
• Nannies
• Private Nurses
• Yard Workers

Furthermore, “[i]f a worker is your employee, it does not matter whether the work is full or part-time or that you hired the worker through an agency or from a list provided by an agency or association. Also, it does not matter if the wages paid are for work done hourly, daily, weekly, or by the job.”

Publication 926, Household Employer’s Tax Guide contains further information. Consult Publication 926 or contact Vision Payroll if you have further questions.

This week’s question comes from Sarah, a household employer. I withheld payroll taxes from my household employees. How do I report and pay payroll taxes for household employees? Answer: Household employers should prepare and file Schedule H (Form 1040), Household Employment Taxes to report and pay payroll taxes if they answer yes to any of the following three questions:

1. Did you pay any one household employee cash wages of $1,700 or more in 2009?
2. Did you withhold federal income tax during 2009 for any household employee?
3. Did you pay total cash wages of $1,000 or more in any calendar quarter of 2008 or 2009 to all household employees?

Household employers should attach Schedule H to Form 1040, Form 1040NR, Form 1040-SS, or Form 1041 if filing any of those forms. If not, Schedule H must be filed separately. Vision Payroll prepares a Schedule H suitable for filing for its household employers. Contact Vision Payroll if you have any questions on Schedule H.