Filing household employment taxes: A timeline for what to do when

nanny tax timeline

 

If you’ve hired a nanny or senior caregiver, you likely know that with this added help comes responsibility: Having a household employee means you must follow payroll and tax rules.

 

While this extra paperwork may seem overwhelming, it is possible to do it on your own. (Alternatively you can use Care.com Homepay to handle it for you.) For the DIYers out there, we’ve put together a list of all the important dates you need to know so you don't miss a tax deadline. Remember that your state may require you to file state tax returns on a different schedule. Check your state’s Department of Labor and/or Department of Revenue for details.

 

Your 2019 month-by-month household employment tax deadlines

January

15: File the fourth installment of Form 1040-ES (estimated tax payment) with the IRS. This comprises Social Security and Medicare taxes (employer and employee portions), federal unemployment insurance taxes (FUTA) and any federal income taxes withheld from your employee's pay from September through December of last year.

31: File state tax returns for the unemployment insurance taxes you’ve accrued and the income taxes you withheld from your caregiver during the fourth quarter of last year (October - December).

31: Prepare Form W-2 and give it to your caregiver. This is what they’ll use to file their personal income tax return.

31: File Form W-3 and Form W-2 Copy A with the Social Security Administration. This is how your caregiver gets credit for the taxes withheld from their pay that ultimately helps determine their retirement benefits.

 

February

After a busy January, you’ve got a month off from taxes. Now may be a good time to conduct a performance review with your caregiver.

 

March

Another month of no tax deadlines. If your caregiver has already filed their taxes and did not get the refund they expected, let them know they can change their income tax withholding to have less or more taxes withheld each pay period.

 

April

15: Your personal income tax return is due. Make sure you’ve prepared and attached a Schedule H to account for your household employment activity from last year. It lists all the wages paid to your caregiver as well as the federal taxes you’ve paid. And don’t forget about including the Child and Dependent Care Tax Credit as well. You could save up to $1,200!

15: File your first Form 1040-ES for the current tax year. It covers your federal household employment tax liability for January - March.

30: File a state income tax return and a state unemployment insurance tax return for the quarter that ended on March 30.

 

May

Nothing is due this month, but remember to keep up with any changes to the law that may affect how you manage your caregiver.

 

June

17: File Form 1040-ES with the IRS to cover your federal household employment tax liability for April and May. This will most likely be a smaller payment since it only covers two months.

 

July

31: Quarterly state income and unemployment insurance tax returns are due for the taxes withheld from your caregiver and accrued by you respectively during the months of April, May and June.

 

August

You’ve got a month off from any tax-related duties. Still, take a few minutes to brush up on the household employment requirements in your state to make sure you’re staying on top of things.

 

September

16: File the third Form 1040-ES of the year with the IRS. It’s an accumulation of your federal household employment taxes for the months of June, July and August.

 

October

31: File quarterly state tax returns to account for the unemployment insurance taxes you owe and the income taxes you withheld from your caregiver. Taxes are based on the wages you paid your caregiver from July - September.

 

November

There are no tax filing deadlines to worry about this month. Use this time to talk to your caregiver about any changes to their schedule during the upcoming holiday season. Both of you need to be on the same page about when care is needed. Also, your company is probably going through Open Enrollment for benefits around this time, so make sure you sign up for a Dependent Care Account. You could save thousands of dollars next year on your care-related expenses.

 

December

Again, there are no tax filing deadlines this month. However, most new laws take effect in January so make sure you’ll be in compliance when the New Year begins. It’s also a good time to review the employment contract you have with your caregiver and make any necessary changes.

 

If all of this seems like a lot of work, don’t worry. Care.com HomePay is here to help if you’d like to offload these tasks. We’ll make sure all your state tax returns and estimated tax payments are accurate and filed on time.

 
 
* The tax information contained in this article should not be used for any actual nanny relationship without the advice and guidance of a professional tax advisor who is familiar with all the relevant facts. The information contained herein is general in nature and is not intended as legal, tax or investment advice. Furthermore, the information contained herein may not be applicable to or suitable for your specific circumstances and may require consideration of other matters.
 

16 Comments

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Photo of Tom B.

Tom B.

Hey Kodi. You should go back and withhold on those first $1,600. Since it's a pretty small amount, it shouldn't be too much of an inconvenience for you or your nanny.
June 02, 2015 at 12:07 PM
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Kodi N.

I hired a part time nanny in April and now realize I should've been withholding. Where do I start at this point. Her YTD earnings are around $1600.
May 21, 2015 at 12:28 AM
Photo of Tom B.

Tom B.

Hello Rachel. No, you should not issue a 1099 to your nanny. That actually misclassifies her as an independent contractor, which is a tax no-no. Instead, your nanny will claim the wages you paid her as Other Income on line 7 of her 1040 with the letters "HSH" to designate household employment income.
January 16, 2015 at 12:47 PM
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Rachel G.

I paid my nanny less than $1000 this past year in one quarter. I know I don't need to submit a W-2 for her but do I need to issue a 1099 instead?
January 15, 2015 at 9:50 PM
Photo of Tom B.

Tom B.

Hey Dan. The IRS and the state actually do require both families to pay unemployment insurance taxes. This is because each family in a nanny share is considered a separate employer, which is also why both families have to establish their own EIN as you mentioned. But the good news is, since you're splitting the nanny's wages, you'll also split the unemployment insurance taxes, so the financial burden is minimal.
January 13, 2015 at 12:49 PM
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Dan S.

If I am doing a nanny share, I understand that we both should establish EINs and pay SS/Medicare/State taxes. However, do we both have to pay federal and state unemployment taxes? That seems wrong or at least unfair.
January 10, 2015 at 11:34 PM
Photo of Tom B.

Tom B.

Hello Jennifer. I'm Tom Breedlove, Director of Care.com HomePay and I can help you with your question. In reading your question, it seems you live in a state that does not have income taxes. In that case, yes, the only quarterly filing requirement you'll have is your state unemployment taxes. While it's not explicitly required for you to follow the 1040 Estimated Payment schedule, I would recommend it because it's possible that holding over the entire tax liability could result in underpayment penalties for you. I would recommend speaking to your income tax preparer though because it's possible you could get by without making Estimated Payments.
November 04, 2014 at 12:59 PM
Photo of Jennifer L.

Jennifer L.

Hi Stephanie, I just hired a nanny in the last quarter and just paid my state quarterly unemployment taxes. Am I correct that those are the only "quarterly" taxes due? My employee's withholding, employee FICA, employer FICA and federal unemployment taxes are all filed with a Schedule H (1040) by April 15? I can pay estimated taxes and file a 1040 ES if I want the tax burden to be less, but these are not required? Do I understand this all correctly? Thank you for your help! Jennifer
November 03, 2014 at 5:34 PM
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Stephanie B.

Hi Diana! You probably have the most in-depth, technical question I've seen on Care.com and I'm really happy to see you're putting in the effort to do things correctly :) To answer your question, the reason why the IRS didn't see your tax payments is because only in rare circumstances can household employment taxes be placed on a 941. The IRS isn't really set up to match up your 941 returns to your Schedule H because the 941 is generally used for businesses - whereas your household employment tax liability is reconciled on your personal income taxes. You did the right thing by alerting the IRS on your 941-X that the estimated payments for 1st quarter should be rolled over to your future 1040-ES schedule. That will allow them to be on the lookout for future 1040-ES vouchers from you. Even though it's late, you can still send in 1040-ES #2 if you'd like, or wait until 1040-ES #3 is due on October 15. The odds of the IRS penalizing you for a late voucher that offsets your yearly tax liability is pretty low and honestly the same odds would apply if you waited another 3 months to roll over 1040-ES#2 with 1040-ES#3. I hope I've answered your question thoroughly enough Diana, but if not, please respond and I'll help clarify.
July 11, 2014 at 12:06 PM
Photo of Diana R.

Diana R.

When we first hired a nanny we had a local CPA handle our first filing and she had us submit estimated tax payments using Form 941 and our the EIN we set up as a household employer. Unfortunately, when we filed our 1040 and Schedule H the IRS never saw the payments ties to our EIN and said we still owed taxes (which equaled the exact amount of the estimated taxes we'd submitted with our Form 941s) Upon calling the IRS, the IRS agent told us to file Form 941-X for each of our 2013 quarterly 941 payments and our 1st Qtr 2014 941 payment and to tell the IRS to roll over each payment to our SSN (which we did). We are now getting ready to file our 2nd quarter estimate tax payment and just discovered that the deadline for the Form 1040ES 2nd Qtr (June 15) is not the same as the deadline for the Form 941 2nd Qtr (July 31). Can we still go ahead and file our 2nd quarter estimated taxes on Form 1040ES or should we wait and file them with the 3rd quarter payment? Our inclination is to go ahead and file now even though it's 3 weeks late due to the different timeline. Any suggestions would be appreciated. Thanks.
July 10, 2014 at 5:36 PM
Photo of Stephanie B.

Stephanie B.

Hi Christina! Personal assistants and companions are still considered household employees because you're still working in the family's home performing duties they assign to you at times they designate. Since the majority of the questions on these article do tend to focus around nannies, I completely understand why you'd be unsure. Good luck on your new job!
April 23, 2014 at 11:28 AM
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Christina R.

Hello, If I am an assistant or companion (not involving children)for a potential employer am I considered a sub contractor? I would do computer work, errands, and household tasks. I would also help potential employer with her aunt that lives in a facility. I would be working in California? Thank you, Christina
April 23, 2014 at 10:02 AM
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Stephanie B.

Hi Rachael! When you send in your 1040-ES forms, you'll use your Social Security Number. This is because your federal tax liability as a household employer is reconciled through your personal income tax return via Schedule H. So as long as the IRS has your SSN, you're good to go.
April 11, 2014 at 11:10 AM
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Rachael

When filing the 1040-ES each quarter, should I use my social security number, or the EIN I applied for as a household employer?
April 10, 2014 at 10:33 AM
Photo of Stephanie B.

Stephanie B.

Hi Alison! My name is Stephanie Breedlove and I'm the VP of Care.com HomePay. The 1040-ES schedule isn't quite quarterly. For 2014, here's how it breaks down: 1040-ES #1 is for taxes accrued in Jan, Feb & March 1040-ES #2 is for taxes accrued in Apr & May 1040-ES #3 is for taxes accrued in June, July & Aug 1040-ES #4 is for taxes accrued in Sept, Oct, Nov & Dec You'll only send in 1 form and it includes both halves of Social Security & Medicare, the federal income taxes you withheld from your employee, and the federal unemployment insurance taxes (FUTA) you owe.
March 31, 2014 at 12:32 PM
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Alison S

When filling out the 1040-ES form each quarter, do we submit one for us (the employer with the 7.65% of taxable wages for SSA and Medicare, an additional form for the employee (with her information?) for the other 7.65% for SSA and Medicare plus her Federal income tax withholding? What forms do we fill out to submit FUTA?
March 29, 2014 at 12:47 AM

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