Schedule H Employment Taxes paid throughout the year, TBTX adds them to my tax Liability.

[scurling]

I have a household employee who cares for my son who has special needs.

I have an employee EIN, and use Quickbooks payroll service to pay all associates taxes throughout the year.

e.g.: Federal Unemployment, Medicare, social security, and state unemployment.

The problem:  TbTx is adding all of these payments and increasing my taxes for the amount of the total:

Employee federal withholding

Federal Unemployment (company)

Medicare (company)

Social Security (company)

Va (state) Unemployment Company.

All of these taxes have been paid by the employee and/or the company throughout the 2021 year.

Why is TbTx including these taxes in my total tax liability, and increasing my tax bill by that amount?

[DavidD66]

If you are using QuickBooks payroll to pay your household employee you should not file a Schedule H.

Schedule H allows you to pay your Payroll taxes with your Form 1040.  

"If a government agency or third-party agent reports and pays the employment taxes on wages paid to your household employee on your behalf, you don't need to file Schedule H to report those taxes." Please see the "Tip" on page H-4 of: 2021 Instructions for Schedule H 

[scurling]

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.

[ThomasM125]

What you need to determine is if the taxes are being paid in as estimated taxes, under your social security number, or if you set up an employer account with a separate federal ID number, where you file form 941/943 and form 940. If you paid the taxes using an employer account number, then you shouldn't report the household wages on your personal tax return. Otherwise, you complete schedule H on your personal tax return and report the payroll taxes paid in as estimated taxes in the Estimates and Other Taxes Paid section of TurboTax, which is in the Deductions and Credits section.

[scurling]

" if you set up an employer account with a separate federal ID number, where you file form 941/943 and form 940. If you paid the taxes using an employer account number, then you shouldn't report the household wages on your personal tax return. "

Thomas:

Thanks for the reply.  I do have an EIA (as recommended by the IRS) , and I filed 940, & 941 forms,  so how do I report those takes paid out of my pocket if not on my personal 1040 filings?  Do I enter them by quarter in estimated taxes, along with other estimated tax payments I made not associated with household employment?

[DianeW777 · Accepted solution]

No.  If the payments were already paid on the Form 941 (Employer quarterly or semi annual) report, they are not part of your individual tax return.  No Schedule H is required.  Do not enter them as estimated tax payments.

The only place your payments will be shown on your tax return (not withholding taxes separately) is on the child care credit (Form 2441).

Follow these steps to get to the Child and Dependent Care Credit in TurboTax.

1. If you're not in your return already, sign in to TurboTax and select either Review/Edit or Pick up where you left off under Deductions & Credits.
2. Select Search from the top menu, type in child care credit, and select the Jump to link that appears above the search results.
3. Answer the questions to complete the section.

@scurling 

[Edited: 03/29/2022 | 5:45a PST]

[scurling]

Diane:

Thanks for the reply.

I do not qualify for the Child or Dependent Care credit.  Our dependent child did not live with us last year.  Our son is a dependent adult who needs constant care.   He has lived with his care giver for the last two years.  My form submission is rejected after answering the, "did the dependent live with you", question.

The appropriate  tax payments were made (employee and employer) and reported on the Form 941 & 940.  If I were a business, I could file corporate taxes and claim those "company paid" taxes.  I am not a business, so how do I claim those taxes I paid as the employer, if not on my 1040?   I see no other way to associate my paid tax expenses, as the employer,  with the IRS?

[ThomasM125]

I think you mean that you are trying to get a tax deduction for the employment taxes. They are not deductible on your personal tax return. You can only deduct state income or sales taxes and property taxes on a federal tax return as itemized deductions. Payroll taxes are only deductible against business income, which you don't have.

[MED4]

Hi. I have the same situation as @scurling except I do qualify for the child care credit:

I set up a sole proprietorship and filed and paid withholding using 941/940. Now I want to take the care credit. Do I enter the caregiver information as my sole proprietorship and EIN? Or do I use the nanny’s name and SSN? When TurboTax asks if this employee was a household employee do I enter yes or no?

[AmyC]

The person paid is your household employee so you will enter their name and social on the form for child care. You will enter the caregiver is a household employee. 

Your sole proprietorship was just to file the 940/941 information. The IRS has all the numbers linked so you get the credit on your personal return even though you paid using your EIN. 

@MED4