Not sure if you need a 1099 for household employee taxes? The IRS has specific guidelines for who they consider contract workers and who they designate as a household employee. Make sure that you know which one you plan to hire. There is no one way to differentiate the workers. What you must do is have an upfront discussion with any worker or agency. Make sure that all involved parties are on the same page regarding how you will pay the employee and how you will report the payment for their services.
Advanced Micro Solutions provides affordable, detailed, and trustworthy software for household employers. Whether it is your first time navigating 1099 for household employee taxes or you encountered problems without a software service in the past, we can help you. Our W-2/1099 Forms Filer generates a variety of different 1099, W-2, and related forms. Pair our base program with AMS Payroll and/or an e-file solution to streamline your responsibilities.
Who is a Household Employee?
A household employee is someone who works in or around your home. You control the service that they provide and the way in which they provide it. A household employee may work full time or part time for you or your family. Employers typically file Schedule H instead of a 1099 for household employee taxes. Use the form to report the wages that you pay an employee on an hourly, daily, or weekly basis. You can also pay the employee per job assignment. The IRS may consider who you hire an employee even if you hired them through an agency or association.
The types of household employees include, but are not limited to:
- Babysitters and nannies
- Private nurses and caretakers
- Cleaning people and maids
- Domestic workers and housekeepers
- Health aides
- Yard workers
Employees must provide services in your home and it must relate to household work. Someone is self-employed if they control how they do their work and oftentimes if they provide their own tools. A self-employed worker offers their services as an independent business to the public.
Schedule H vs. 1099 for Household Employee Taxes
Use Schedule H (Form 1040) when you report household employment taxes. Employers fill out the form if they pay cash wages to a household employee. Confirm that you withheld federal income tax from the paid wage.
Include Schedule H with your tax return if you paid any single employee a minimum of $2,400 in the past tax year. Another qualification is when your cash wages for your household employees total $1,000 or more during a three-month calendar quarter in the current or prior tax year. You must file Schedule H if an employee requests that you withhold taxes.
The IRS considers using a 1099 for household employee taxes as tax evasion. Only use a 1099 form once you guarantee that a worker will not leave after they complete their job. You will owe all of the back taxes and any additional fines if you attempt to misclassify an employee.
How AMS Helps Manage Household Employees
Our 1099-etc software provides simple and reliable solutions for when you manage any of your household employees. Our core product is a complete database system. It offers an easy-to-use and menu-driven format for clients who want to quickly enter their data. Enter employee data in a spreadsheet format with our Browse command feature. Calculate selected fields to ensure the greatest accuracy on your forms.
Many users pair the base program with the AMS Payroll and E-File add-on modules. The payroll add-on automatically calculates federal, state, and local payroll taxes. It further supports federal payroll forms like 1040 SchH, 941, 940, 943, and 944. Print client letters and check the related state and federal tax liabilities through the “View” command as needed.
Choose your preferred e-file option before you pay your employees and complete the household employment tax forms. Eliminate the ongoing expenses of buying and mailing W-2 and 1040 SchH forms. Users have two options for our 1099-etc E-Filer software. Purchase E-File Direct or E-File Services. Software like E-File Services charges users a fee per form. A third-party vendor electronically files the forms upon completion.
Discover which product or combination of products makes the most sense when you manage all 1099 for household employee taxes. Our free 1099-etc Demo shows how our base program and modules interact with each other. Call customer support at (405) 340-0697 with any questions.