Instructions For Schedule H (Form 1040) Household Employment Taxes

on a Schedule H that you previously filed with Form 1041, file an

What Is the Earned Income Credit

“Amended” Form 1041 and attach a corrected Schedule H.

(EIC)?

If you discover an error on a Schedule H that you filed as a

The EIC is a refundable tax credit for certain workers.

stand-alone return, file another stand-alone Schedule H with the

corrected information. In the top margin of your corrected Schedule

Which employees must I notify about the EIC?

You must notify

H write (in red ink if possible) “CORRECTED” followed by the

your household employee about the EIC if you agreed to withhold

date you discovered the error.

federal income tax from the employee’s wages but did not do so

because the income tax withholding tables showed that no tax

If you owe tax, pay in full with your Form 1040X, Form 1041, or

should be withheld.

stand-alone Schedule H. If you overpaid tax on a previously filed

Schedule H, then depending on whether you adjust or claim a

Note.

You are encouraged to notify each employee whose wages

refund, you must certify that you repaid or reimbursed the

for 2010 were less than $43,352 ($48,372 if married filing jointly)

employee’s share of social security and Medicare taxes, or that you

that he or she may be eligible for the EIC.

have obtained consents from your employees to file a claim for

How and when must I notify my employees?

You must give the

refund for the employee tax. See Pub. 926 for complete instruc-

employee one of the following:

tions.

•

The official IRS Form W-2, which has the required informa-

tion about the EIC on the back of Copy B.

How To Get Forms and Publications

•

A substitute Form W-2 with the same EIC information on the

back of the employee’s copy that is on Copy B of the official IRS

To get the IRS forms and publications mentioned in these instruc-

Form W-2.

tions (including Notice 797), visit IRS.gov or call

•

Notice 797, Possible Federal Tax Refund Due to the Earned

1-800-TAX-FORM (1-800-829-3676).

Income Credit (EIC).

•

Your written statement with the same wording as Notice 797.

Privacy Act and Paperwork

If you are not required to give the employee a Form W-2, you

must provide the notification by February 10, 2011.

Reduction Act Notice

You must hand the notice directly to the employee or send it by

First-Class Mail to the employee’s last known address.

We ask for the information on this form to carry out the Internal

Revenue laws of the United States. You are required to give us the

How do my employees claim the EIC?

Eligible employees claim

information. We need it to ensure that you are complying with these

the EIC on their 2010 tax returns.

laws and to allow us to figure and collect the right amount of tax. If

you do not provide the information we ask for, or provide false or

fraudulent information, you may be subject to penalties.

Rules for Business Employers

You are not required to provide the information requested on a

Do not use Schedule H if you chose to report employment taxes for

form that is subject to the Paperwork Reduction Act unless the form

your household employees along with your other employees on

displays a valid OMB control number. Books or records relating to

Form 941, Employer’s QUARTERLY Federal Tax Return; Form

a form or instructions must be retained as long as their contents may

943, Employer’s Annual Federal Tax Return for Agricultural Em-

become material in the administration of any Internal Revenue law.

ployees; or Form 944, Employer’s ANNUAL Federal Tax Return.

If you report this way, be sure to include your household employ-

Subtitle C, Employment Taxes, of the Internal Revenue Code

ees’ wages on your Form 940, Employer’s Annual Federal Unem-

imposes employment taxes on wages, including income tax with-

ployment (FUTA) Tax Return.

holding. This form is used to determine the amount of the taxes that

you owe. Section 6011 requires you to provide the requested infor-

mation if the tax is applicable to you. Section 6109 requires you to

State Disability Payments

provide your identification number.

Certain state disability plan payments to household employees are

Generally, tax returns and return information are confidential, as

treated as wages subject to social security and Medicare taxes. If

required by section 6103. However, section 6103 allows or requires

your employee received payments from a plan that withheld the

the IRS to disclose or give the information shown on your tax return

employee’s share of social security and Medicare taxes, include the

to others as described in the Code. For example, we may disclose

payments on lines 1 and 3 of Schedule H and complete the rest of

your tax information to the Department of Justice for civil and

Part I through line 5. Add lines 2, 4, and 5. From that total, subtract

criminal litigation, and to cities, states, the District of Columbia,

the amount of these taxes withheld by the state. Enter the result on

and U.S. commonwealths and possessions to administer their tax

line 6. Also, enter “disability” and the amount subtracted on the

laws. We may also disclose this information to other countries

dotted line next to line 6. See the notice issued by the state for more

under a tax treaty, to federal and state agencies to enforce federal

details.

nontax criminal laws, or to federal law enforcement and intelli-

gence agencies to combat terrorism.

The time needed to complete and file this form will vary depend-

How To Correct Schedule H

ing on individual circumstances. The estimated burden for individ-

If you discover an error on a Schedule H that you previously filed

ual taxpayers filing this form is approved under OMB control

with Form 1040, Form 1040NR, or Form 1040-SS, file Form

number 1545-0074 and is included in the estimates shown in the

1040X and attach a corrected Schedule H. If you discover an error

instructions for their individual income tax return.

H-7

Instructions For Schedule H (Form 1040) Household Employment Taxes - 2010 Page 7

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