What this line means
Social Security, Medicare, and federal unemployment (FUTA) taxes you owe as a household employer, calculated on Schedule H. If you paid a household employee — a nanny, housekeeper, home health aide, private cook, gardener, or other domestic worker — $2,800 or more in cash wages during 2025, you are a household employer and owe these taxes.
Does this apply to you?
- You paid a nanny, au pair, or babysitter $2,800 or more in cash wages during the year
- You employed a housekeeper, house cleaner, or private cook
- You paid a home health aide or senior caregiver who works in your home
- You hired a gardener, driver, or other domestic worker and controlled how the work was done
Easy to overlook
The $2,800 threshold applies per employee, not total You owe household employment taxes for each employee you paid $2,800 or more in 2025. 1 If you paid a nanny $20,000 and a house cleaner $2,500, you owe household employment taxes only for the nanny. The house cleaner falls below the threshold. But if you paid two separate caregivers $3,000 each, you owe for both. IRS Schedule H Instructions — Household Employment Taxes
Household employees are not independent contractors If you control when, where, and how the work is done, the worker is your employee — even if you both prefer to call them a contractor. 2 Paying a nanny in cash and issuing no tax forms does not make them a contractor. The IRS applies a control test: if you set the schedule, provide supplies, and direct the work, you are an employer. Misclassifying a household employee as a contractor can result in back taxes, penalties, and interest on all unpaid employment taxes. General filing pattern — nanny tax missed by first-time household employers
Watch out for this
Forgetting the FUTA (federal unemployment tax) portion. Schedule H calculates both FICA taxes (Social Security and Medicare) and FUTA. The FUTA tax is 6% on the first $7,000 of wages per employee, reduced by a credit for state unemployment taxes paid. Many household employers focus only on the Social Security and Medicare portion and miss the FUTA calculation entirely.
Footnotes
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IRS Schedule H (Form 1040) Instructions, Do You Have a Household Employee. https://www.irs.gov/instructions/i1040sh ↩
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IRS Publication 926, Household Employer’s Tax Guide. https://www.irs.gov/pub/irs-pdf/p926.pdf ↩