IRS Form 1040 Schedule H “Household Employment Taxes” Explained

Schedule H (Form 1040), Household Employment Taxes, is how you report and pay Social Security, Medicare and federal unemployment taxes for a household employee, such as a nanny, housekeeper, caregiver or private gardener who works in or around your home.

Is the Worker Your Employee?

A household worker is generally your employee if you control not only what work is done but how it’s done. Workers from an agency that controls the work, or self-employed contractors who provide their own tools and offer services to the public, usually aren’t.

2026 Thresholds

• Social Security and Medicare: owed if you pay one household employee $3,000 or more in cash wages in 2026, according to IRS Publication 926. Each side pays 7.65% (6.2% Social Security plus 1.45% Medicare). Social Security applies up to the $184,500 wage base.
• Federal unemployment (FUTA): owed if you pay total cash wages of $1,000 or more to household employees in any calendar quarter. The rate is 6.0% on the first $7,000 per employee, usually reduced to 0.6% by credit for state unemployment taxes.
• Income tax withholding: not required, but you can withhold if the employee asks and you agree.

Who’s Exempt

Don’t count wages paid to your spouse, your child under 21, your parent (with exceptions), or an employee under 18 for whom household work isn’t their principal occupation. A student counts as having a different principal occupation.

What You Need to Do

1. Get an Employer Identification Number (EIN).
2. Withhold the employee’s share of Social Security and Medicare, or pay it yourself. If you pay it, it counts as additional wages.
3. Give the employee a Form W-2 by January 31 and file it with the Social Security Administration.
4. File Schedule H with your Form 1040.
5. Pay the tax during the year, through extra withholding from your own pay or estimated tax payments, to avoid an underpayment penalty.

You may also owe state unemployment tax and need to register with your state labor department.

Why It Matters

Paying a household employee “off the books” can leave you liable for back taxes, penalties and interest, and it costs your employee Social Security credits. Properly reported wages can also support the child and dependent care credit or a dependent care FSA.

Related: Tax Benefits of Hiring Your Children.

Get Help From Diehl CPA

Tax rules change often, and the right answer depends on your full financial picture. Diehl CPA, led by Mark Diehl, CPA, CFE, prepares returns and builds tax plans for investors, retirees and closely held businesses. Learn about our tax return preparation and investment tax planning services, or contact us to talk through your situation.

This article is general information, not tax or legal advice for your specific situation. Updated October 2026.