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Instructions for Schedule H (Form 1040)

You Should Also Know(p8)


Estimated Tax Penalty(p8)

You may need to increase the federal income tax withheld from your pay, pension, annuity, etc., or make estimated tax payments to avoid an estimated tax penalty based on your household employment taxes shown on Schedule H, line 26. You may increase your federal income tax withheld by giving your employer a new Form W-4, or by giving the payer of your pension a new Form W-4P. Make estimated tax payments by filing Form 1040-ES, Estimated Tax for Individuals. For more information, see Pub. 505.
Estimated tax payments must be made as the tax liability is incurred: by April 18, 2016; June 15, 2016; September 15, 2016; and January 17, 2017. If you file your Form 1040 by January 31, 2017, and pay the rest of the tax that you owe with the form, you don't need to make the payment due on January 17, 2017.
You won't be penalized for failure to make estimated tax payments if both 1 and 2 below apply for the year.
  1. You won't have federal income tax withheld from wages, pensions, or any other payments you receive.
  2. Your income taxes, excluding your household employment taxes, wouldn't be enough to require payment of estimated taxes.

What Records To Keep(p8)

You must keep copies of Schedule H and related Forms W-2, W-3, and W-4 for at least 4 years after the due date for filing Schedule H or the date the taxes were paid, whichever is later. If you have to file Form W-2, also keep a record of each employee's name and SSN. Each payday, you should record and keep the dates and amounts of:

What Is the Earned Income Credit (EIC)?(p8)

The EIC is a refundable tax credit for certain workers.
Which employees must I notify about the EIC?(p8)
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.
You’re encouraged to notify each employee whose wages for 2016 were less than $47,955 ($53,505 if married filing jointly) that he or she may be eligible for the EIC for 2016.
How and when must I notify my employees?(p8)
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, 2017.
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?(p9)
Eligible employees claim the EIC on their 2016 tax returns.

Rules for Business Employers(p9)

Don't use Schedule H if you chose to report employment taxes for your household employees along with your other employees on Form 941, Employer's QUARTERLY Federal Tax Return; Form 943, Employer's Annual Federal Tax Return for Agricultural Employees; or Form 944, Employer's ANNUAL Federal Tax Return. If you report this way, be sure to include your household employees' wages on your Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return.

State Disability Payments(p9)

Certain state disability plan payments to household employees are treated as wages subject to social security and Medicare taxes. If your employee received payments from a plan that withheld the employee's share of social security and Medicare taxes, include the payments on lines 1 and 3 of Schedule H and complete the rest of Part I through line 7. Add lines 2, 4, 6, and 7. From that total, subtract the amount of these taxes withheld by the state. Enter the result on line 8. Also, enter disability and the amount subtracted on the dotted line next to line 8. See the notice issued by the state for more details.

How To Correct Schedule H(p9)

If you discover an error on a Schedule H that you previously filed with Form 1040, Form 1040NR, or Form 1040-SS, file Form 1040X, Amended U.S. Individual Income Tax Return, and attach a corrected Schedule H. If you discover an error on a Schedule H that you previously filed with Form 1041, file an Amended Form 1041 and attach a corrected Schedule H.
If you discover an error on a Schedule H that you filed as a stand-alone return, file another stand-alone Schedule H with the corrected information. In the top margin of your corrected Schedule H write (in red ink if possible) CORRECTED followed by the date you discovered the error.
If you owe tax, pay in full with your Form 1040X, Form 1041, or stand-alone Schedule H. If you overpaid tax on a previously filed Schedule H, then depending on whether you adjust or claim a refund, you must certify that you repaid or reimbursed the employee's share of social security and Medicare taxes, or that you have obtained consents from your employees to file a claim for refund for the employee tax. See Pub. 926 for complete instructions.

How To Get Forms and Publications(p9)

To get the IRS forms and publications mentioned in these instructions (including Notice 797), visit