All employers are required to pay the same employment taxes, whether it’s a commercial business with a global workforce or a homeowner paying a housekeeper that visits once a week. If you employ people to work inside your home (like landscapers, pool maintenance staff, nannies, house cleaners, etc.) then you are responsible for employment tax. Both Schedule H and Form 941 are used to determine an employer’s employment tax liability, but they are not interchangeable.
Who’s considered a household employee for tax purposes?
Household employees are people you hire to perform specific tasks within your home. As the employer, you have control over their roles and responsibilities. If they regularly work in your home, you determine their schedules and the specific tasks they are expected to complete. Qualified household employee occupationshousehold employee occupations include:
- Babysitters
- Butlers
- Caretakers
- Cooks
- Drivers
- Health aids
- Housekeepers
- Maids
- Nannies
- Private nurses
- Yard workers
It’s important to note that if you employ someone as a household employee, you are generally required to provide them with a W-2 form.
What are household employment taxes?
As of 2025, when you hire someone to work in or around your home and pay thempay them $2,800 or more in a calendar year, you are required to withhold and pay Social Security and Medicare taxes (the FICA payroll tax), currently set at 7.65% of their wages. If you pay $1,000 or more in any quarter, you may also need to pay Federal Unemployment Tax (FUTA), typically 6.2% but potentially reduced to 0.6% based on state qualifications. Many states impose their own unemployment taxes as well.
When to file Schedule H
If any of these apply to you, then the wages you pay are subject to Social Security and Medicare taxes and you should complete a Schedule H as part of your tax return.
- You paid any one household worker over $2,800 in cash wages that year,
- You paid all workers at least $1,000 in a quarter that year or the previous year, or
- You withheld federal income taxes from any employees during the year
As an employer, it’s important to understand the household employee threshold for tax purposes. Keep in mind that only wages you pay directly to the employee qualify. If a household worker is hired through an agency, and you pay the agency for their services, the agency is responsible for the employment tax.
When to file Form 941
Form 941 applies more to home-based businesses, not necessarily household employees. So, for example, if you run a landscaping business from your garage, you’ll want to fill out Form 941. Even though your employees are out and about mowing lawns and trimming hedges, the company is still based at your home, so wages paid to those workers should be detailed on that form, not a Schedule H.
Form 941 is filed quarterly, regardless of whether payroll was processed during that time or not. Failing to do so can result in penalties.
To complete Form 941, gather your employer information (business name, address, EIN), payroll data (number of employees, total wages, reported tips), tax details (federal income tax withheld, Social Security and Medicare wages, total taxes owed), and payment information (total tax deposits and any overpayments from previous quarters).
Make sure you only report payroll once
A common mistake that household employers make is reporting their payroll twice. This happens when both Schedule H and Form 941 are filed in the same year. Many business owners file Form 941 quarterly and report wages there. Then, when tax season rolls around they enter the same info on Schedule H and end up paying the employment tax twice.
Be careful not to make this mistake and avoid paying too much.
How do household employment taxes impact your tax return?
If you need to file Schedule H or Form 941, it can affect your personal tax return in the following ways:
Schedule H: The taxes calculated on Schedule H must be included in your total tax liability on Form 1040, which may increase what you owe or reduce your refund.
Form 941: This form reports employment taxes for business owners. You must accurately reflect any wages paid to employees on Form 1040. If you owe taxes based on Form 941, it will also impact your overall tax liability.
In both cases, make sure you have accurate records to calculate any additional taxes owed and explore any potential credits or deductions to reduce your tax bill.
