Do I need to pay household employment taxes for 2023?

If you have a household employee, you need to withhold and pay social security and Medicare taxes if you paid cash wages of $2,600 or more in 2023 to any one household employee. See Did you have a household employee? and the Line A instructions, later, for more information. You need to pay federal unemployment tax if you paid total cash wages of $1,000 or more in any calendar quarter of 2022 or 2023 to household employees. See the Part II. Federal Unemployment (FUTA) Tax instructions, later, for more information.

How do I file Schedule H?

File Schedule H with your Form 1040, 1040-SR, 1040-NR, 1040-SS, or 1041. If you’re not filing a 2023 tax return, file Schedule H by itself.

Do I make a separate payment?

No. You pay both income and employment taxes to the United States Treasury when you file Schedule H with your return.

When do I pay?

Most filers must pay by April 15, 2024.

How many copies of Form W-3 do I send to the SSA?

Send one copy of Form W-3 with Copy A of Form(s) W-2 to the SSA, and keep one copy of Form W-3 for your records.

Social security and Medicare tax for 2023.

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%. The social security wage base limit is $160,200.

The Medicare tax rate is 1.45% each for the employee and employer, unchanged from 2022. There is no wage base limit for Medicare tax.

Social security and Medicare taxes apply to the wages of household workers you pay $2,600 or more in cash wages in 2023. For more information, see Cash wages and $2,600 test , later.

For information about the rates and wage threshold that will apply in 2024, see Pub. 926.

Qualified parking exclusion and commuter transportation benefit.

For 2023, the monthly exclusion for qualified parking is $300 and the monthly exclusion for commuter highway vehicle transportation and transit passes is $300.

Credit reduction state.

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.

For 2023, there are credit reduction states. If you paid any wages that are subject to the unemployment compensation laws of a credit reduction state, your credit against federal unemployment tax will be reduced based on the credit reduction rate for that credit reduction state. Use Worksheet 2 to figure your credit reduction for 2023.

The COVID-19 related credit for qualified sick and family leave wages is limited to leave taken after March 31, 2020, and before October 1, 2021.

Generally, the credit for qualified sick and family leave wages, as enacted under the Families First Coronavirus Response Act (FFCRA) and amended and extended by the COVID-related Tax Relief Act of 2020, for leave taken after March 31, 2020, and before April 1, 2021, and the credit for qualified sick and family leave wages under sections 3131, 3132, and 3133 of the Internal Revenue Code, as enacted under the American Rescue Plan Act of 2021 (the ARP), for leave taken after March 31, 2021, and before October 1, 2021, have expired. However, employers that pay qualified sick and family leave wages in 2023 for leave taken after March 31, 2020, and before October 1, 2021, are eligible to claim a credit for qualified sick and family leave wages on Schedule H filed for 2023. For more information, see the instructions for line 8b, line 8c, line 8e, and line 8f, later.

Use Worksheet 3 to figure the credit for leave taken after March 31, 2020, and before April 1, 2021. Use Worksheet 4 to figure the credit for leave taken after March 31, 2021, and before October 1, 2021. For more information about the credit for qualified sick and family leave wages, go to IRS.gov/PLC.

Bicycle commuting reimbursements.

The Tax Cuts and Jobs Act suspends the exclusion of qualified bicycle commuting reimbursements from your employee's income for tax years beginning after 2017 and before 2026.

Outsourcing payroll duties.

You’re responsible to ensure that tax returns are filed and deposits and payments are made, even if you contract with a third party to perform these acts. You remain responsible if the third party fails to perform any required action. Before you choose to outsource any of your payroll and related tax duties (that is, withholding, reporting, and paying over social security, Medicare, FUTA, and income taxes) to a third-party payer, such as a payroll service provider or reporting agent, go to IRS.gov/OutsourcingPayrollDuties for helpful information on this topic. For more information on the different types of third-party payer arrangements, see section 16 of Pub. 15.

Paid preparers.

If you use a paid preparer to complete Schedule H, the paid preparer must complete and sign the paid preparer’s section of the Schedule H unless you’re attaching Schedule H to Form 1040, 1040-SR, 1040-NR, 1040-SS, or 1041. A paid preparer must sign Schedule H and provide the information requested in the Paid Preparer Use Only section only if the preparer was paid to prepare Schedule H and isn't your employee. The preparer must give you a copy of the return in addition to the copy to be filed with the IRS.

Did you have a household employee?

If you hired someone to do household work and you could control what work they did and how they did it, you had a household employee. This is true even if you gave the employee freedom of action. What matters is that you had the right to control the details of how the work was done.

Workers who aren't your employees.

Workers you get from an agency aren't your employees if the agency is responsible for who does the work and how it is done. Self-employed workers are also not your employees. A worker is self-employed if only the worker can control how the work is done. A self-employed worker usually provides their own tools and offers services to the general public in an independent business.

Exceptions.

If you get an extension of time to file your return, file your return with Schedule H by the extended due date. If you’re a fiscal year filer, file your return and Schedule H by the due date of your fiscal year return, including extensions.

Penalties.

You may have to pay a penalty if you don't give Forms W-2 to your employees or file Copy A of the forms with the SSA by the due dates. You may also have to pay a penalty if you don't show your employee's SSN on Form W-2 or don't provide correct information on the form.

Social security number (SSN).

Enter your SSN. Form 1041 filers, don't enter a number in this space. But be sure to enter your EIN in the space provided.

Employer identification number (EIN).

An EIN is a nine-digit number assigned by the IRS. The digits are arranged as follows: 00-0000000. Enter your EIN in the space provided. If you don't have an EIN, see Do You Have an Employer Identification Number (EIN), earlier. If you applied for an EIN but haven't received it, enter “Applied For” and the date you applied. Don't use your SSN as an EIN.

Line A. Did you pay any one household employee cash wages of $2,600 or more in 2023?

To figure the total cash wages you paid in 2023 to each household employee, don't include amounts paid to any of the following individuals.

Cash wages.

Cash wages include wages paid by check, money order, etc. Cash wages don't include the value of food, lodging, clothing, transit passes, or other noncash items you give a household employee. However, cash you give your employee in place of these items is included in cash wages.

Noncash wages paid to household employees aren't subject to social security taxes or Medicare taxes; however, they are subject to federal income tax unless a specific exclusion applies. Report the value of taxable noncash wages in box 1 of Form W-2 together with cash wages. Don't show noncash wages in box 3 or in box 5 of Form W-2. See section 5 of Pub. 15 for more information on cash and noncash wages, and Pub. 15-B for more information on fringe benefits.

Line 1a. Total cash wages subject to social security tax.

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.

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.

Line 1b. Qualified sick and family leave wages paid in 2023 for leave taken after March 31, 2020, and before April 1, 2021, included on line 1a.

Enter the qualified sick and family leave wages you paid in 2023 for leave taken after March 31, 2020, and before April 1, 2021, included on line 1a. For more information on qualified sick and family leave wages paid in 2023 for leave taken after March 31, 2020, and before April 1, 2021, see the instructions for line 8g and line 8i, later.

Line 2a. Social security tax.

Multiply the amount on line 1a by 12.4% (0.124). Enter the result on line 2a.

Line 2b. Employer share of social security tax on qualified sick and family leave wages paid in 2023 for leave taken after March 31, 2020, and before April 1, 2021.

Multiply the amount on line 1b by 6.2% (0.062). Enter the result on line 2b.

Line 2c. Total social security tax.

Subtract line 2b from line 2a. Enter the result on line 2c.

Line 3. Total cash wages subject to Medicare tax.

Enter the total cash wages (see Cash wages , earlier) paid in 2023 to each employee who meets the $2,600 test, explained earlier. There is no limit on wages subject to Medicare tax.

Line 4. Medicare tax.

Multiply the amount on line 3 by 2.9% (0.029). Enter the result on line 4.

Line 5. Total cash wages subject to Additional Medicare Tax withholding.

Enter the total cash wages (see Cash wages , earlier) paid to each employee in 2023 that exceeded $200,000.

Line 6. Additional Medicare Tax withholding.

Multiply the amount on line 5 by 0.9% (0.009). Enter the result on line 6.

Line 7. Federal income tax withheld.

Enter any federal income tax you withheld from the wages you paid to your household employees in 2023. See Pub. 926 and Pub. 15-T for information on withholding federal income taxes.

Line 8a. Total social security, Medicare, and federal income taxes.

Add lines 2c, 4, 6, and 7. Enter the result on line 8a.

Emergency Paid Sick Leave Act (EPSLA).

Employers with fewer than 500 employees and, for leave taken after March 31, 2021, and before October 1, 2021, certain governmental employers without regard to number of employees (except for the federal government and its agencies and instrumentalities unless described in section 501(c)(1)) are entitled to a credit if they provide paid sick leave to employees that otherwise meets the requirements of the EPSLA. Under the EPSLA, as amended for purposes of the ARP, wages are qualified sick leave wages if paid to employees that are unable to work before October 1, 2021, because the employee:

Expanded Family and Medical Leave Act (Expanded FMLA).

Employers with fewer than 500 employees and, for leave taken after March 31, 2021, and before October 1, 2021, certain governmental employers without regard to number of employees (except for the federal government and its agencies and instrumentalities unless described in section 501(c)(1)) are entitled to a credit under the FFCRA, as amended for purposes of the ARP, if they provide paid family leave to employees that otherwise meets the requirements of the Expanded FMLA. For leave taken after March 31, 2020, and before April 1, 2021, wages are qualified family leave wages if paid to an employee who has been employed for at least 30 calendar days when an employee is unable to work due to the need to care for a son or daughter under 18 years of age or incapable of self-care because of a mental or physical disability because the school or place of care for that child has been closed, or the childcare provider for that child is unavailable, due to a public health emergency. See Son or daughter , earlier, for more information. For leave taken after March 31, 2021, and before October 1, 2021, the leave can be granted for any other reason provided by the EPSLA, as amended for purposes of the ARP.

For leave taken after March 31, 2020, and before April 1, 2021, the first 10 days for which an employee takes leave may be unpaid. During this period, employees may use other forms of paid leave, such as qualified sick leave, accrued sick leave, annual leave, or other paid time off. After an employee takes leave for 10 days, the employer provides the employee paid leave (that is, qualified family leave wages) for up to 10 weeks. For leave taken after March 31, 2021, and before October 1, 2021, the 10-day rule discussed above doesn't apply and the paid leave can be provided for up to 12 weeks.

Line 8b. Nonrefundable portion of credit for qualified sick and family leave wages for leave taken after March 31, 2020, and before April 1, 2021.

Enter the nonrefundable portion of the credit for qualified sick and family leave wages for leave taken after March 31, 2020, and before April 1, 2021, from Worksheet 3, Step 2, line 2j.

Complete line 8b only if qualified sick leave wages and/or qualified family leave wages were paid in 2023 for leave taken after March 31, 2020, and before April 1, 2021.

Businesses, tax-exempt organizations with fewer than 500 employees, and Schedule H filers that provide paid sick leave under the EPSLA and/or provide paid family leave under the Expanded FMLA are eligible to claim the credit for qualified sick and family leave wages for leave taken after March 31, 2020, and before April 1, 2021. For purposes of the credit, qualified sick leave wages and qualified family leave wages are wages for social security and Medicare tax purposes, determined without regard to the exclusions from the definition of employment under sections 3121(b)(1)–(22), that an employer pays that otherwise meet the requirements of the EPSLA or Expanded FMLA. The credit for qualified sick and family leave wages consists of the qualified sick leave wages, the qualified family leave wages, the qualified health plan expenses allocable to those wages, and the employer share of Medicare tax allocable to those wages. The nonrefundable portion of the credit is limited to the employer share of social security tax reported on Schedule H, line 2a.

Any credit in excess of the remaining amount of the employer share of social security tax is refundable and reported on Schedule H, line 8e. For more information on the credit for qualified sick and family leave wages, go to IRS.gov/PLC.

Qualified health plan expenses allocable to qualified sick and family leave wages.

The credit for qualified sick leave wages and qualified family leave wages is increased to cover the qualified health plan expenses that are properly allocable to the qualified leave wages for which the credit is allowed. These qualified health plan expenses are amounts paid or incurred by the employer to provide and maintain a group health plan but only to the extent such amounts are excluded from the employees' income as coverage under an accident or health plan. 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. For more information, go to IRS.gov/PLC.

Line 8c. Nonrefundable portion of credit for qualified sick and family leave wages for leave taken after March 31, 2021, and before October 1, 2021.

Enter the nonrefundable portion of the credit for qualified sick and family leave wages from Worksheet 4, Step 2, line 2l.

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.

Businesses, tax-exempt organizations with fewer than 500 employees, and Schedule H filers that provide paid sick leave under the EPSLA, as amended for purposes of the ARP, and/or provide paid family leave to employees that otherwise meets the requirements under the Expanded FMLA, as amended for purposes of the ARP, are eligible to claim the credit for qualified sick and family leave wages for leave taken after March 31, 2021, and before October 1, 2021. The nonrefundable portion of the credit is limited to the employer share of Medicare tax reported on Schedule H, line 4.

For purposes of this credit, qualified sick leave wages and qualified family leave wages are wages for social security and Medicare tax purposes, determined without regard to the exclusions from the definition of employment under sections 3121(b)(1)–(22), that an employer pays that otherwise meet the requirements of the EPSLA or Expanded FMLA, as enacted under the FFCRA and amended for purposes of the ARP.

The credit for qualified sick and family leave wages consists of the:

For more information on the collectively bargained amounts discussed above, see sections 3131 and 3132.

Any credit in excess of the remaining amount of the employer share of Medicare tax is refundable and reported on Schedule H, line 8f. For more information on the credit for qualified sick and family leave wages, go to IRS.gov/PLC.

Line 8d. Total social security, Medicare, and federal income taxes after nonrefundable credits.

Add lines 8b and 8c and then subtract that total from line 8a. Enter the result on line 8d.

Line 8e. Refundable portion of credit for qualified sick and family leave wages for leave taken after March 31, 2020, and before April 1, 2021.

Enter the refundable portion of the credit for qualified sick and family leave wages from Worksheet 3, Step 2, line 2k.

Complete line 8e only if qualified sick leave wages and/or qualified family leave wages were paid in 2023 for leave taken after March 31, 2020, and before April 1, 2021.

Businesses, tax-exempt organizations with fewer than 500 employees, and Schedule H filers that provide paid sick leave under the EPSLA and/or provide paid family leave under the Expanded FMLA are eligible to claim the credit for qualified sick and family leave wages. The credit for qualified sick and family leave wages consists of the qualified sick leave wages, the qualified family leave wages, the qualified health plan expenses allocable to those wages, and the employer share of Medicare tax allocable to those wages. The refundable portion of the credit is allowed after the employer share of social security tax is reduced to zero by nonrefundable credits that are applied against the employer share of social security tax.

Line 8f. Refundable portion of credit for qualified sick and family leave wages for leave taken after March 31, 2021, and before October 1, 2021.

Enter the refundable portion of the credit for qualified sick and family leave wages from Worksheet 4, Step 2, line 2m.

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.

Businesses, tax-exempt organizations with fewer than 500 employees, and Schedule H filers are entitled to a credit if they provide paid sick leave to employees that otherwise meets the requirements of the EPSLA, as amended for purposes of the ARP, and/or provide paid family leave to employees that otherwise meets the requirements under the Expanded FMLA, as amended for purposes of the ARP, for leave taken after March 31, 2021, and before October 1, 2021. The refundable portion of the credit is allowed after the employer share of Medicare tax is reduced to zero by nonrefundable credits that are applied against the employer share of Medicare tax.

Line 9. Did you pay total cash wages of $1,000 or more in any calendar quarter of 2022 or 2023 to all household employees?

Review the cash wages you paid to all your household employees for each calendar quarter of 2022 and 2023.

If the total for any quarter in 2022 or 2023 is not $1,000 or more, check "No," stop here, and include the amount from line 8d on Schedule 2 (Form 1040), line 9. Include the amounts, if any, from lines 8e and 8f on Schedule 3 (Form 1040), line 13z. If you don't file Form 1040, complete Schedule H, Part IV, and follow the instructions under When and Where To File , earlier.

If the total for any quarter in 2022 or 2023 is $1,000 or more, check "Yes" and complete Schedule H, Part II.

Credit for contributions paid to state.

You may be able to take a credit of up to 5.4% against the FUTA tax, resulting in a net FUTA tax rate of 0.6%. But to do so, you must pay all the required contributions for 2023 to your state unemployment fund by April 15, 2024. Fiscal year filers must pay all required contributions for 2023 by the due date of their federal income tax returns (not including extensions).

State unemployment taxes are sometimes called contributions. Contributions are payments that a state requires you, as an employer, to make to its unemployment fund for the payment of unemployment benefits. However, contributions don't include:

If you paid contributions to any credit reduction state, see the instructions for line 23, later.

Lines 10 through 12.

Answer the questions on lines 10 through 12 to see if you should complete Section A or Section B of Part II.

Line 25. Enter the amount from line 8d.

Enter the amount from line 8d. If there is no entry on line 8d, enter -0-.

Line 26. Add line 16 (or line 24) and line 25.

Add the amounts on lines 16 and 25. If you were required to complete Section B of Part II, add the amounts on lines 24 and 25 and enter the total on line 26.

Line 27. Are you required to file Form 1040?

Follow the instructions in the chart.

Paid Preparer Use Only.

You must complete this part if you were paid to prepare Schedule H, and aren't an employee of the filing entity, and aren't attaching Schedule H to Form 1040, 1040-SR, 1040-NR, 1040-SS, or 1041. You must sign in the space provided and give the filer a copy of Schedule H in addition to the copy to be filed with the IRS.

Exception.

You won't be penalized for failure to make estimated tax payments if both (1) and (2) below apply for the year.

Which employees must I notify about the EIC?

You must notify your household employee about the EIC if you agreed to withhold federal income tax from the employee's wages but didn't do so because the income tax withholding tables showed that no tax should be withheld.

How and when must I notify my employees?

You must give the employee one of the following items.

If you’re not required to give the employee a Form W-2, you must provide the notification by February 7, 2024.

If the notification isn't given on Form W-2 in a timely manner, you must hand the notice directly to the employee or send it by First-Class Mail to the employee's last known address.

How do my employees claim the EIC?

Eligible employees claim the EIC on their 2023 tax returns.