Nanny with Schedule H

[pmathews33]

I have a nanny who works in my home. I use SurePayroll to complete all of her and my tax documents. They have prepared her W2 and my Schedule H form. Which TurboTax product should I choose? 

[DawnC]

In order to file a tax return with a Schedule H, you will need TurboTax Deluxe or higher.  All TurboTax personal versions (except TurboTax Free Edition and TurboTax Live Basic) handle Schedule H, Household Employment Taxes. Here's how to fill one out:

1. Open or continue your return in TurboTax.
2. Search for household employee taxes, sch h (use this exact term including the comma and space).
3. Select the Jump to link at the top of the search results.
4. Answer Yes to Did You Have a Nanny or Household Employee? and follow the instructions.

[shsw09a]

Hi, I have Turbotax Home and Business version, I tried to follow your recommendation for the sch H.  It didn't work.  Do you know if Turbotx Home and Business can let me fill out schedule H if I am e-filing?

Thanks,

H Jenny Anderson

[email address removed]

[DawnC]

Yes, it does; I just verified it works in Home and Business.  Click on search at the top of the page and type     sch h      exactly like that, all lowercase letters and you should get the Jump to sch h link when you hit the enter key.   When you click on search, you have to wait a few seconds before you type - it is very slow to respond.  ;(  

[shsw09a]

for 2018 tax return, I did follow the procedure you suggested.  I entered all the Security Tax , Medicare tax and Federal Income tax withheld from the schedule H prepared by the employment payroll service.  IRS refunded me the entire amount of those three items.  

For 2019, I did the same thing entered all those three items. Then my tax liability went up for the total of the 3 items on line 8 of the schedule H.  I realized maybe the reason I got the refund from IRS is because I double paid the Schedule H taxes.  I should not enter those amount on the 1040 since the payroll services has already paid them for me.  What did I do wrong that made me to enter those tax liability twice on the step by step questionnaire.  thank you so much for you quick reply.  Jenny

[DawnC]

You didn't do anything wrong; you were just following the instructions in TurboTax.  If you have a payroll company prepare the Schedule H and pay the taxes on your behalf and file the related 940/941 returns, then as you pointed out, you do not need to enter it on your Form 1040. The payroll company has already taken care of the tax payments and reporting for you.  If you don't take care of the tax payments and payroll reporting through the payroll service, you need to complete the Schedule H when you file your personal tax return.  

A lot of taxpayers do not use a payroll service or the payroll service does not file the payroll tax forms; they have to enter the Schedule H on their tax return and pay the associated taxes.  You were just trying to do everything correctly and doubled up the entries.  But, it is better to do it twice rather than not at all (which a lot of taxpayers do that too).  

[shsw09a]

Thank you so much, I won't enter anything on form 1040 then.  Do I still answer YES to Did You have a Nanny or Household Employee? and follow the instructions to the next page if I don't enter anything on the Social Security Tax, medicare and income tax withholding?

[DawnC]

You should prepare the Schedule H unless the payroll company filed the appropriate payroll tax forms (940/941).   It depends on whether or not you pay them for that service.  If they file the payroll returns for you, you can skip the Schedule H and answer No to the nanny question.  You can verify it with them if they did or not.  

If they only prepare the Schedule H, then you should enter the Schedule H on your return so that it gets filed and then enter the taxes you paid in the Estimates Paid section of TurboTax.  When you enter the amounts you already paid, you won't pay them again.  Sorry for the confusion!  To enter the taxes paid in TurboTax: 

• After you finish entering your information in the Nanny and Household Employee Tax section,
• In the Search box (upper right of the program) search "estimates paid" and select the "Jump to" link from results
• On the next screen, click on the Start/Revisit box next to Federal - State - Local estimated taxes for 2019.  Federal, state and local are each reported on separate line items.  
•  Enter your payment(s) on the next screen, How much did you pay in Federal -State - Local estimated taxes?

If you (or the payroll company) filed a 940/941 and paid the tax, you do not file a schedule H at all.  See IRS Pub 926 page 11: https://www.irs.gov/pub/irs-pdf/p926.pdf

@shsw09a

[shsw09a]

Thank you so much. got it.

Jenny

[jasonray]

This was incredibly helpful information! We were stuck on this detail for almost an hour, trying to figure out why we were getting double charged.

It'd be great if TurboTax included this info in the "did you have a nanny?" question, so that people like us don't run into this issue in the future!

[CookieCrisp027]

Not quite - there's also state unemployment tax and you have to file a schedule H if you're in a state that requires that. When I enter this information into turboTax the calculation for taxes owed is different from what the payroll service says it is and gives a different liability.  what's going on here?  I've entered this information into my estimated taxes paid and itno the nany tax box and i don't undertstand why this all made my tax liability skyrocket.

[RobertB4444]

If you have entered in that you have a state tax liability that wasn't paid then it would increase your taxes.  If the payroll service didn't pay the taxes due then it would increase your taxes.  (Make certain you are reviewing what they actually sent and not just what is reported on your nanny's W2 - that isn't the total amount paid).  

@CookieCrisp027