When you file your 2010 federal income tax return in 2011, attach Schedule H (Form 1040), Household Employment Taxes, to your Form 1040. Use Schedule H to figure your total household employment taxes (social security, Medicare, FUTA, and withheld federal income taxes). Add these household employment taxes to your income tax. Pay the amount due by April 15, 2011. (For more information about using Schedule H, see Schedule H under What Forms Must You File? on page 9.)
You can avoid owing tax with your return if you pay enough tax during the year to cover your household employment taxes, as well as your income tax. You can pay the additional tax in any of the following ways.
- Ask your employer to withhold more federal income tax from your wages in 2010.
- Ask the payer of your pension or annuity to withhold more federal income tax from your benefits.
- Make estimated tax payments for 2010 to the IRS.
- Increase your payments if you already make estimated tax payments.
You may be subject to the estimated tax underpayment penalty if you did not pay enough income and household employment taxes during the year. (See Publication 505, Tax Withholding and Estimated Tax, for information about the underpayment penalty.) However, you will not be subject to the penalty if both of the following situations apply to you.
- You will not have federal income tax withheld from wages, pensions, or any other payments you receive.
- Your income taxes, excluding your household employment taxes, would not be enough to require payment of estimated taxes.
If you are employed and want more federal income tax withheld from your wages to cover your household employment taxes, give your employer a new Form W-4, Employee's Withholding Allowance Certificate. Complete it as before, but show the additional amount you want withheld from each paycheck on line 6.
If you receive a pension or annuity and want more federal income tax withheld to cover household employment taxes, give the payer a new Form W-4P, Withholding Certificate for Pension or Annuity Payments (or a similar form provided by the payer). Complete it as before, but show the additional amount you want withheld from each benefit payment on line 3.
Get Publication 919, How Do I Adjust My Tax Withholding?, to make sure you will have the right amount withheld. It will help you compare your total expected withholding for 2010 with the combined income tax and employment taxes that you can expect to figure on your 2010 return.taxmap/pubs/p926-005.htm#en_us_publink100086761
If you want to make estimated tax payments to cover household employment taxes, get Form 1040-ES, Estimated Tax for Individuals. You can use its payment vouchers to make your payments by check or money order. You may be able to pay by Electronic Funds Withdrawal (EFW) or credit card. For details, see the form instructions and visit www.irs.gov
You can pay all the employment taxes at once or you can pay them in installments. If you have already made estimated tax payments for 2010, you can increase your remaining payments to cover the employment taxes. Estimated tax payments for 2010 are due April 15, June 15, and September 15, 2010, and January 18, 2011. taxmap/pubs/p926-005.htm#en_us_publink100086762
If you own a business as a sole proprietor or your home is on a farm operated for profit, you can choose either of two ways to pay your 2010 household employment taxes. You can pay them with your federal income tax as previously described, or you can include them with your federal employment tax deposits or other payments for your business or farm employees. For information on depositing employment taxes, see Publication 15 (Circular E).
If you pay your household employment taxes with your business or farm employment taxes, you must report your household employment taxes with those other employment taxes on Form 941, Employer's QUARTERLY Federal Tax Return, Form 944, Employer's ANNUAL Federal Tax Return, or Form 943, Employer's Annual Federal Tax Return for Agricultural Employees, and on Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return. See Business employment tax returns, later.
The deduction that can be taken on Schedules C and F (Form 1040) for wages and employment taxes applies only to wages and taxes paid for business and farm employees. You cannot deduct the wages and employment taxes paid for your household employees on your Schedule C or F.
For more information about paying taxes through federal income tax withholding and estimated tax payments, and figuring the estimated tax penalty, get Publication 505, Tax Withholding and Estimated Tax.