Did you employ a nanny or other household worker in 2024 and pay them $2,700 or more in wages? If so, congratulations—you’re officially a household employer with tax filing obligations in the eyes of the IRS! That means you will need to report your employees’ wages and pay employment taxes when you file your federal income tax return.
Understanding the required tax forms is key to staying compliant and avoiding penalties. Here’s a breakdown of the essential documents you'll need to file.
W-2 Tax Form: Reporting Wages and Withholdings
A Form W-2 provides a detailed summary of your nanny’s earnings and any taxes you withheld from their paycheck.
- Deadline: Must be provided to your nanny by January 31, 2025. You will also need to provide this information to the Social Security Administration (SSA), see below.
- Copies Needed:
- Copy A → Sent to the SSA (along with Form W-3)
- Copies B, C, and 2 → Given to your employee
- Key Information Required:
- Your employee’s full name and Social Security Number (SSN) (as it appears on their Social Security card)
- Total wages paid in 2024
- Taxes withheld
W-3 Tax Form: Transmittal of Wage and Tax Statements
The W-3 form serves as a summary of all W-2s issued for your household employees. It reports:
- Total earnings paid to all household employees
- Medicare and Social Security wages
- Withholdings for all employees
This form must match the information on your W-2s and be submitted with them to the SSA by January 31, 2025.
Schedule H (Form 1040): Reporting Household Employment Taxes
The Schedule H tax form is filed with your personal income tax return (Form 1040) and is used to calculate the employment taxes you owe for 2024.
You must file Schedule H if you:
- Paid $2,700 or more in wages to a household employee in 2024
- Withheld federal income tax from their paycheck
- Owe Social Security, Medicare, or FUTA taxes
Important: You’ll need an Employer Identification Number (EIN) to file Schedule H. If you don’t have one, you can apply through the IRS.
Filing Deadline: April 15, 2025 (same as your personal tax return). If you file for a tax extension, it also applies to Schedule H.
Alternative Filing: Form 941 or Form 941 and Form 940
Household employers file and pay the exact same employment taxes as commercial employers do. The IRS established the Form 1040 Schedule H in 1995 to simplify and streamline the household payroll tax reporting. Often times, however, the household employer or their CPA are confused about the proper reporting and begin filing quarterly form 941 for household employment. This can create several complications that take time and effort to resolve. Learn more about these forms here.
- Form 941 – Employer’s Quarterly Federal Tax Return
- Form 944 – Employer’s Annual Federal Tax Return
- Form 940– Employer’s Annual Federal Unemployment (FUTA) Tax Return
Reminder: Household employee wages cannot be claimed as a business expense. If you report them through your business, make sure they are correctly classified.
Additionally, if you use Form 941 or Form 944, you’ll also need to file:
Form 940 – Employer’s Annual Federal Unemployment (FUTA) Tax Return
Need Help with Nanny Taxes?
Understanding household employment taxes can be overwhelming, but you don’t have to figure it out alone. HomeWork Solutions has been helping families like yours for over 30 years, making payroll and tax compliance stress-free. Schedule a complimentary consultation, or give us a call 1-800-626-4829.