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

that household employee's wages. For more information, see

Contents

Page

Cash wages

and

$2,000

test, later.

For information about the rates and wage threshold that will

Reminders

apply in 2018, see Pub. 926 (released in December 2017).

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Who Needs To File Schedule H?

. . . . . . . . . . . . . . . . . .

Qualified parking exclusion and commuter transportation

benefit. For 2017, the monthly exclusion for qualified parking

Who Needs To File Form W-2 and Form W-3?

. . . . . . . .

is $255 and the monthly exclusion for commuter highway vehi-

Do You Have an Employer Identification Number

cle transportation and transit passes is $255. These exclusion

(EIN)?

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

amounts are unchanged from 2016.

Can Your Employee Legally Work in the United

Credit reduction state. A state that hasn't repaid money it

States?

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

borrowed from the federal government to pay unemployment

What About State Employment Taxes?

. . . . . . . . . . . . . .

benefits is a “credit reduction state.” The Department of Labor

When and Where To File

. . . . . . . . . . . . . . . . . . . . . . .

determines these states. If an employer pays wages that are

How To Fill In Schedule H, Form W-2, and Form W-3

. . .

subject to the unemployment tax laws of a credit reduction

state, that employer must pay additional federal unemployment

Schedule H

. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

tax.

Worksheet 1. Worksheet for Credit for Late

Contributions

. . . . . . . . . . . . . . . . . . . . . . . . . .

For 2017, there are credit reduction states. If you paid wages

Worksheet 2. Worksheet for Household

that were subject to the unemployment compensation laws of a

Employers in a Credit Reduction State

. . . . . . . . .

credit reduction state, your credit against federal unemploy-

ment tax will be reduced based on the credit reduction rate (for

Form W-2 and Form W-3

. . . . . . . . . . . . . . . . . . . .

example, 0.021) for that credit reduction state. See

Worksheet

Estimated Tax Penalty

. . . . . . . . . . . . . . . . . . . . . . . . .

2, later, for credit reduction states for 2017.

What Records To Keep

. . . . . . . . . . . . . . . . . . . . . . . .

Reminders

What Is the Earned Income Credit (EIC)?

. . . . . . . . . . . .

Rules for Business Employers

. . . . . . . . . . . . . . . . . . .

Outsourcing payroll duties. You’re responsible to ensure that

How To Correct Schedule H

. . . . . . . . . . . . . . . . . . . .

tax returns are filed and deposits and payments are made, even

if you contract with a third party to perform these acts. You re-

How To Get Forms and Publications

. . . . . . . . . . . . . .

main responsible if the third party fails to perform any required

Completed Examples of Schedule H, Form W-2, and

action. If you choose to outsource any of your payroll and rela-

Form W-3

. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

ted tax duties (that is, withholding, reporting, and paying over

Privacy Act and Paperwork Reduction Act Notice

. . . . . .

social security, Medicare, FUTA, and income taxes) to a

third-party payer, such as a payroll service provider or report-

ing agent, go to

IRS.gov/OutsourcingPayrollDuties

for helpful

Future Developments

information on this topic. For more information about the dif-

ferent types of third-party payer arrangements, see section 16

For the latest information about developments related to Sched-

of Pub. 15.

ule H and its instructions, such as legislation enacted after they

Paid preparers are required to sign Schedule H. Your paid

were published, go to IRS.gov/ScheduleH.

preparer must sign Schedule H in Part IV unless you’re attach-

What's New

ing Schedule H to Form 1040, 1040NR, 1040-SS, or 1041. A

paid preparer must sign Schedule H and provide the informa-

Worksheet for Credit for Late Contributions. We moved

tion requested in the Paid Preparer Use Only section only if

the Worksheet for Credit for Late Contributions from Pub. 926

the preparer was paid to prepare Schedule H and isn't your em-

to the

line 23

instructions. We now refer to this worksheet as

ployee. The preparer must give you a copy of the return in ad-

Worksheet

1. If you paid state contributions late and you're al-

dition to the copy to be filed with the IRS.

so in a credit reduction state, you must complete Worksheet 1

If you’re required to file a 2017 Form W-2 for any house-

before completing the credit reduction worksheet, which we

hold employee, you must also send Form W-3 with Copy A of

now refer to as

Worksheet

Form(s) W-2 to the SSA. You’re encouraged to file your

Forms W-2 and W-3 electronically. If filing electronically via

Changes to tax rates and wage threshold. The social securi-

the SSA's Form W-2 Online service, the SSA generates Form

ty tax rate is 6.2% each for the employee and employer, un-

W-3 data from the electronic submission of Form(s) W-2. Go

changed from 2016. The social security wage base limit is

to the SSA's Employer W-2 Filing Instructions & Information

$127,200. The Medicare tax rate is 1.45% each for the employ-

website at

SSA.gov/employer

to learn about electronic filing.

ee and employer, unchanged from 2016. There is no wage base

limit for Medicare tax.

Who Needs To File Schedule H?

If you pay a household employee $2,000 or more in cash

You must file Schedule H if you answer “Yes” to any of the

wages during 2017, you must report and pay social security

questions on lines A, B, or C of Schedule H.

and Medicare taxes on all the wages, including the first $2,000

paid to that employee. If you pay less than $2,000 to a house-

Did you have a household employee? If you hired someone

hold employee, don't pay social security or Medicare taxes on

to do household work and you could control what work he or

H-2

Instructions For Schedule H (Form 1040) - Household Employment Taxes - 2017 Page 2

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