It’s tax time again! If you had a nanny, babysitter, or any household employee last year, you need to file form Schedule H with your tax return if you answer yes to any of the following:
- Did you pay any one household employee cash wages of $2,100 in 2019 or $2,200 in 2020?
- Did you withhold federal income tax during 2019 for any household employee?
- Did you pay total cash wages of $1,000 or more in any calendar quarter of 2019 to all household employees?
Schedule H – Part I
Below is an example of what Part 1 of Schedule H looks like when filled out, with some hints added in-line. This example is for a nanny who worked during school vacations and made $7,150 gross cash wages.
While the forms below walk through an example from a prior year, Form Schedule H with your 2019 tax return will look similar, except that the limit for item 1 (Total cash wages subject to social security tax) has increased to $128,700.
If using the Android version of the Nanny Pay Advisor app, you will find your nanny’s gross earnings for Last Year (2019) by going to the Reports section and selecting “Employee Pay Summary” for Range “Last Year”.
For the iOS version of the Nanny Pay Advisor app, you will find this info on the top of the Pay History tab when the “Last Year” time range is selected.
Now onto Part II to calculate Federal Unemployment (FUTA) tax owed. The calculations will vary depending on your state.
Schedule H – Part II for most states (except US Virgin Islands)
For the 2019 tax year, only the US Virgin Islands is considered a “Credit Reduction State” for Federal Unemployment (FUTA) Tax purposes. If you have employed a nanny there, skip to the next section.
For all other states, the calculation of FUTA owed is straight-forward. You will be paying .6% (.006) of your nanny’s first $7,000 wages in FUTA. So this means the maximum amount of FUTA you will need to pay is $42 for the year.
Below is an example from Massachusetts, a non-credit reduction state. Notice if you can answer No to questions 10, 11, and 12, then you should leave all of Section B blank.
Then after you fill in the calculations in Part III, then this Schedule H and payment owed goes along with your 1040/1041 tax filing. And that’s all there is to it!
Schedule H – Part II for Credit Reduction States (US Virgin Islands)
If you have employed a nanny in the Virgin Islands, then for Part II you will need to instead fill out Section B and leave Section A blank.
In prior years, this has also applied to California and other states, but starting for the 2019 tax year, the only credit reduction state left is the US Virgin Islands.
Schedule H – Part III
Then after you fill in the calculations in Part III, this Schedule H and payment owed goes along with your 1040/1041 tax filing as part of the yearly household employer duties.