Form W-3 is used to summarize the W-2 information for all of your employees. The IRS use the W-3 form to check against employees’ personal tax returns to make sure that the numbers reported are accurate. Like W-2 forms, all W-3 forms must be completed and filed no later than January 31 of the following calendar year. Subtitle C, Employment Taxes, of the Internal Revenue Code imposes employment taxes on wages and provides for income tax withholding. This form is used to determine the amount of the taxes that you owe.

1. For the 2022 tax year, the standard deduction for a head of household is $19,400, compared to just $12,950 for a single filer.
2. To find out if the wages are subject to these taxes, see the instructions for Schedule H, line 1a, line 3, and line 5, later.
3. Schedule H helps you calculate the three formulas needed to figure out how much employment tax you owe—which is based on the total amount of wages you paid out to household employees.
4. Get unlimited tax advice right on your screen from live experts as you do your taxes.
5. One of the first things you need to review is whether your nanny or housekeeper qualifies as a household employee.
6. However, when not subject to social security and Medicare taxes, leave boxes 3, 4, 5, and 6 blank on Form W-2; only complete boxes 1 and 2.

If you need more space, attach a statement using the same format as line 17. If you don’t know your rate, contact your state unemployment tax agency. Enter the total of contributions (defined earlier) you paid to your state unemployment fund for 2023. If you turbotax household employee didn’t have to make contributions because your state gave you a 0% experience rate, enter “0% rate” on line 14. Household employers located in Puerto Rico report the value of taxable noncash wages in box 7 of Form 499R-2/W-2PR together with cash wages.

Do I have to report all housekeeping income?

Enter the taxable wages on which you must pay taxes to the unemployment fund of the state shown in column (a). If your experience rate is 0%, enter the amount of wages you would have had to pay taxes on if that rate hadn’t been granted. If you paid any household employee more than $7,000 in 2023, include on line 15 only the first $7,000 of that employee’s cash wages. Enter the total cash wages https://turbo-tax.org/ (see Cash wages , earlier) paid in 2023 to each employee who meets the $2,600 test, explained earlier. If you paid any household employee cash wages of more than $160,200 in 2023, include on line 1a only the first $160,200 of that employee’s cash wages. Enter the total of cash wages (see Cash wages , earlier) paid in 2023 to each household employee who meets the $2,600 test, explained earlier.

Enter the qualified health plan expenses allocable to qualified family leave wages paid in 2023 for leave taken after March 31, 2020, and before April 1, 2021. This amount is also entered on Worksheet 3, Step 2, line 2f. You must include the full amount (both the nonrefundable and refundable portions) of the credit for qualified sick and family leave wages in your gross income for the tax year that includes the last day of any calendar quarter in which a credit is allowed.

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The amount of qualified health plan expenses generally includes both the portion of the cost paid by the employer and the portion of the cost paid by the employee with pre-tax salary reduction contributions. However, qualified health plan expenses don’t include amounts that the employee paid for with after-tax contributions. The rate of social security tax on taxable wages, including qualified sick leave wages and qualified family leave wages paid in 2023 for leave taken after March 31, 2021, and before October 1, 2021, is 6.2% each for the employer and employee or 12.4% for both. Qualified sick leave wages and qualified family leave wages paid in 2023 for leave taken after March 31, 2020, and before April 1, 2021, aren’t subject to the employer share of social security tax; therefore, the tax rate on these wages is 6.2%. If you pay wages subject to FICA tax, FUTA tax, or if you withhold federal income tax from your employee’s wages, you’ll need to file a Schedule H (Form 1040), Household Employment Taxes.

Any credit in excess of the remaining amount of the employer share of Medicare tax is refundable and reported on Schedule H, line 8f. If you pay a household employee $2,600 or more in cash wages during 2023, you must report and pay social security and Medicare taxes on all the wages, including the first $2,600 paid to that employee. The test applies to cash wages paid in 2023 regardless of when the wages were earned.

Household employment taxes

However, don’t count wages paid to your spouse, your child who is under the age of 21, or your parent. Also, don’t consider cash wages that you pay to a household employee in excess of $7,000 as wages subject to FUTA tax. You may be able to take a credit of up to 5.4% against your FUTA tax liability for amounts you paid into state unemployment funds, resulting in a net tax rate of 0.6%. For more information, refer to “Do You Need To Pay Employment Taxes?” in Publication 926.

Common payroll tax forms for household employers

Complete line 8f only if qualified sick leave wages and/or qualified family leave wages were paid in 2023 for leave taken after March 31, 2021, and before October 1, 2021. Complete line 8c only if qualified sick leave wages and/or qualified family leave wages were paid in 2023 for leave taken after March 31, 2021, and before October 1, 2021. You’re not required to withhold federal income tax from wages you pay a household employee. You should withhold federal income tax only if your household employee asks you to withhold it and you agree.

Additional information

If you’re a calendar year taxpayer and have no household employees for 2023, you don’t have to file Schedule H for 2023. With TurboTax Live Business, get unlimited expert help while you do your taxes, or let a tax expert file completely for you, start to finish. Get direct access to small business tax experts who are up to date with the latest federal, state and local taxes. Small business owners get access to unlimited, year-round advice and answers at no extra cost, maximize credits and deductions, and a 100% Accurate, Expert Approved guarantee.

TurboTax Live CPAs and Enrolled Agents are available in English and Spanish, year-round and can also review, sign and file your tax return. For instance, hiring a babysitter once a month to watch your kid for date night generally does not count as a household employee because you’re paying them so infrequently. However, a nanny who lives on your property and watches your children at least five days a week would be considered a household employee. Household employers located in Puerto Rico make estimated tax payments by filing Form 1040-ES (PR).

A state that hasn’t repaid money it borrowed from the federal government to pay unemployment benefits is a “credit reduction state.” The Department of Labor determines these states. If an employer pays wages that are subject to the unemployment tax laws of a credit reduction state, that employer must pay additional federal unemployment tax. Household employee taxes, sometimes called nanny taxes, are federal and state taxes owed on wages paid to household employees. You will owe these taxes if you paid any single household employee more than $2,600 in cash wages in 2023. The minimum is rising slightly in 2024 to $2,700 in cash wages. Qualified health plan expenses allocable to qualified family leave wages reported on line 8m.

If you live in Maine or Massachusetts, you have until April 17, 2024, because of the Patriots’ Day and Emancipation Day holidays. For the first rule, paying for more than half of household expenses, you should take all household expenses into account. This includes your mortgage or rent payment as well as maintenance, insurance, utilities, repairs, and even food.

You may use E-Verify at E-Verify.gov to confirm the employment eligibility of newly hired employees. As an employer, there are a number of federal taxes you need to pay that relate to your employees. If you think a family hired you as an employee but your household employer thought you were a self-employed person, you may need to attach Form 8919 for Uncollected Social Security and Medicare Tax on Wages. By filing this form, your Social Security earnings will be credited to your Social Security record.