Schedule H Requirements for Household Employers

If you paid a nanny, housekeeper, in-home caregiver, or other domestic worker $3,000 or more in cash wages during 2026, the Schedule H requirements for household employers apply to you: you file Schedule H as an attachment to your Form 1040, and it calculates the Social Security, Medicare, and federal unemployment taxes that get added to your personal tax bill.¹ Two other situations pull you in as well, and the rules around who counts as an employee catch many people by surprise.

Is Your Worker Actually a Household Employee

Schedule H only applies if the person working in your home is your employee, not an independent contractor. The IRS uses a control test: if you decide what work gets done and how it gets done, the worker is your employee.² A nanny you direct throughout the day, a housekeeper who follows your routine, or a caregiver working on your schedule are all employees.

A worker who controls the methods and delivers a result is self-employed. A landscaper who brings their own equipment, hires their own helpers, and decides how to do the job is a contractor. Whether work is full- or part-time, whether you found the worker through an agency, and whether you pay hourly or by the job do not change the classification.² If an agency provides the worker and controls how the work gets done, the worker belongs to the agency, and you have no Schedule H obligation for them.

The Three Filing Triggers for 2026

You file Schedule H if any one of these applies for the 2026 tax year:

You paid $3,000 or more in cash wages to any single household employee during 2026 (Social Security and Medicare trigger).¹
You paid $1,000 or more in total cash wages to all household employees in any calendar quarter of 2025 or 2026 (federal unemployment trigger).¹
You and an employee agreed to withhold federal income tax from their wages, even if neither threshold was met.³

The FICA threshold adjusts periodically. It was $2,700 in 2024 and $2,800 in 2025, so verify the current number in Publication 926 each year before you file.

What Counts as Cash Wages

Cash wages include checks, direct deposits, money orders, and any other cash equivalent, not just bills and coins. The value of non-cash benefits you provide, such as meals, lodging, clothing, or transit passes, does not count. But if you hand the employee cash in place of any of those items, the cash is wages.¹

Wages That Are Exempt

Some workers do not count toward the thresholds even when they work in your home:

Wages to your spouse are exempt from both FICA and FUTA.⁴
Wages to your child under 21 are exempt from both FICA and FUTA.⁴
Wages to your parent are exempt from FUTA, and also from FICA unless specific conditions apply, such as your parent caring for your child who is under 18 or requires adult care due to a condition.⁵
Wages to any employee under 18 are exempt from FICA as long as household work is not their principal occupation. Household work is not the principal occupation of a student, regardless of hours.⁴

These exemptions apply per person. If a non-exempt employee crosses a threshold, you still file Schedule H for that employee.

Get an EIN and Keep Payroll Records

You need an Employer Identification Number to file Schedule H. Apply at IRS.gov/EIN and you receive one immediately. On the application, select “Other” and enter “Household employer” along with your Social Security number.⁶

Keep running records of each employee’s full name, Social Security number, cash wages paid, any federal income tax withheld, the employee’s share of FICA withheld, and your state unemployment tax information. Reconstructing a year of payments in April is far harder than logging them as you go.

How the Tax Is Calculated

Social Security and Medicare

You and the employee each pay 7.65% of cash wages: 6.2% for Social Security and 1.45% for Medicare.¹ Social Security tax applies only to wages up to $184,500 in 2026.⁷ Medicare has no wage cap. You are supposed to withhold the employee’s share from each paycheck, but you may pay both halves yourself instead. If you pay the employee’s share, that amount counts as additional wages for income tax purposes but not for FICA purposes.

If you pay any single employee more than $200,000 in the calendar year, you must also withhold an additional 0.9% Medicare tax on wages above that threshold, with no employer match.⁸

Federal Unemployment Tax

FUTA is employer-only. The statutory rate is 6.0% on the first $7,000 of cash wages per employee.⁹ If you pay your state unemployment taxes in full and on time, you get a credit of up to 5.4%, which drops the effective FUTA rate to 0.6%, or a maximum of $42 per employee per year.¹⁰

One catch: if your state has outstanding federal unemployment loans, the credit is reduced and your effective FUTA rate rises. For 2025, California faced a 1.2% credit reduction and the U.S. Virgin Islands faced a 4.5% reduction.¹¹ The Department of Labor publishes the updated list of credit reduction states each November.

Pay the Tax During the Year

Household employers settle up once a year: the Schedule H total is added to your Form 1040 tax liability. But the IRS expects you to fund that obligation during the year, not face a large surprise in April.

You have two practical options. Increase the federal income tax withholding from your own paycheck by giving your employer a new Form W-4, or make quarterly estimated tax payments using Form 1040-ES. For the 2026 tax year, estimated payments are due April 15, June 15, and September 15, 2026, and January 15, 2027.¹

Safe Harbors From the Underpayment Penalty

You avoid an underpayment penalty if any one of these applies:¹²

After subtracting withholding and refundable credits, your balance due is less than $1,000.
Your payments during the year totaled at least 90% of the tax on your 2026 return.
Your payments equaled at least 100% of the tax shown on your 2025 return, or 110% if your 2025 adjusted gross income exceeded $150,000 ($75,000 if married filing separately).

The first year you hire is the hardest, because the new tax was not built into your withholding. Adjusting your W-4 or starting estimated payments early prevents an April shock.

Filing Deadline and W-2 Obligation

Schedule H is filed with your Form 1040, so it shares the deadline: April 15, 2027 for the 2026 tax year. A filing extension on your 1040 covers Schedule H, but an extension to file is not an extension to pay. The tax is still due April 15.¹

You must give each household employee who earned $3,000 or more in Social Security and Medicare wages, or from whom you withheld federal income tax, a completed Form W-2 by January 31 of the following year, and file copies with a Form W-3 transmittal with the Social Security Administration by the same date.¹³ January 31, 2027 falls on a Sunday, so the deadline for 2026 wages shifts to February 1, 2027.¹

Form I-9 and New Hire Reporting

Federal law also requires you to verify each employee’s identity and work authorization using Form I-9. An exception exists for casual domestic work done on a sporadic or intermittent basis, but a nanny or housekeeper on a regular schedule does not qualify.¹⁴ The employee completes their portion on or before their first day, and you examine their original identity documents and complete your portion within three business days of the start date.

You must also report new hires to your state’s new hire reporting agency within 20 days of the start date.¹⁵ Some states impose shorter deadlines.

How Long to Keep the Records

The IRS requires you to keep employment tax records for at least four years after filing the fourth quarter return for the year.¹⁶ Because household employers file annually rather than quarterly, count four years from the date you filed the Form 1040 that included Schedule H. Retain pay logs, the employee’s W-4 if they elected income tax withholding, copies of each W-2 you issued, and your state unemployment tax documentation.

Penalties for Not Filing or Not Paying

Failure to File

If you file your return late, including Schedule H, the penalty is 5% of the unpaid tax for each month or partial month the return is late, up to 25%. For returns due after December 31, 2025, the minimum penalty is $525 if the return is more than 60 days late, or 100% of the unpaid tax if that is less than $525.¹⁷

Failure to Deposit

Late employment tax deposits carry escalating penalties:¹⁸

1 to 5 days late: 2% of the unpaid amount
6 to 15 days late: 5%
More than 15 days late: 10%
More than 10 days after a first IRS notice, or on demand for immediate payment: 15%

The tiers replace one another rather than stacking. The IRS may waive penalties for reasonable cause, but “I didn’t know I was an employer” rarely qualifies. Adjust your withholding or start estimated payments as soon as you hire.

1
Internal Revenue Service. Publication 926 (2026), Household Employer’s Tax Guide
2
Internal Revenue Service. Hiring Household Employees
3
Internal Revenue Service. About Schedule H (Form 1040)
4
Internal Revenue Service. Topic No. 756, Employment Taxes for Household Employees
5
Internal Revenue Service. Tax Situations When Taking Care of a Family Member
6
Internal Revenue Service. Instructions for Form SS-4
7
Social Security Administration. Contribution and Benefit Base
8
Internal Revenue Service. Topic No. 560, Additional Medicare Tax
9
Internal Revenue Service. Topic No. 759, Form 940 – FUTA Tax Return Filing and Deposit Requirements
10
U.S. Department of Labor. Unemployment Insurance Tax Topic
11
Federal Register. Notice of the Federal Unemployment Tax Act (FUTA) Credit Reductions Applicable for 2025
12
Internal Revenue Service. Topic No. 306, Penalty for Underpayment of Estimated Tax
13
Social Security Administration. Deadline Dates to File W-2s
14
U.S. Citizenship and Immigration Services. 2.0 Who Must Complete Form I-9
15
Administration for Children and Families. New Hire Reporting
16
Internal Revenue Service. Employment Tax Recordkeeping
17
Internal Revenue Service. Failure to File Penalty
18
Internal Revenue Service. Failure to Deposit Penalty