I understand your point and the TIP on page H-4 of the IRS Instructions for Schedule-H.
I guess for all practical purposes, I am acting as the "third party agent" in this case, as I pay the employee directly. I file "company" taxes and withhold taxes for the employee. No other agency is involved.
That said, I think there should be some way to report the "company" taxes I paid (Fed Unemployment, Medicare, Social Security, and State Unemployment) and received credit for those taxes paid.
The Schedule-H form even has check boxes to indicate all required taxes have been paid, which I checked, and it still adds the total annual tax liability to my 1040.
Thanks for the help on this issue.
