I've been on this merry-go-round with the Schedule-H and filing employee and employer taxes.
You MUST file the full amount of annual taxes with your Form 1040. The schedule H instructions states this in a single line statement, so it is easily missed. Completing the Schedule-H form with TBTx calculates those taxes for you and allows for your state unemployment payments. It does NOT allow for the state withholding taxes on the form. My state, Virginia, requires me to pay withholding taxes on a quarterly basis, but the federal taxes, need to be withheld and paid with the Form 1040 filing.
Believe, me, I payed employee and employer quarterly federal taxes for two years, and also had to pay the entire tax amount with the Form 1040, Schedule-H submission. This was basically a "double-taxation". I finally had to hire a CPA to work with the IRS and develop a way to recoup/refund the quarterly takes I paid for two years. The process is slow, and I've currently been refunded for 2 of the 8 quarters.
