Schedule H line 7

[Mnpops]

I have already paid quarterly employee federal tax withholding using EFTPS.  Does that mean that I should enter zero on line 7 of schedule H?  

[PattiF]

You can delete your Schedule H from your return as long as you have filed all required federal returns associated with your domestic employee.  The purpose of Schedule H is to ensure the payroll taxes are paid and the income is reported to the IRS.  Since filing Forms 941, 940, and W-2 accomplishes this goal you are not required to also file a Schedule H.

[Mnpops]

Thank you.  I should have included more detail.  Yes, I have filed form 941 each quarter.   However, I misunderstood the ambiguity in IRS instructions and chose to pay only Federal income tax that way 941).   I pay social security, medicare and FUTA via schedule H.  I liked this better than using form 941 because I'm not sure of the actual FUTA amount until I fill out schedule H.

[Mnpops]

I still have the same question.  Can I leave schedule H line 7 blank because I've already paid the Federal Income Tax using form 941?

[DawnC]

Line 7 represents any amounts withheld from the household employee's wages, which should be included with your Form 941 if applicable.     Go through the Schedule H interview and enter all of your amounts and state UE rates there.  TurboTax will calculate all of the taxes, including FUTA.  You will get the following screen where you can indicate if you need to include any state unemployment taxes or if you already paid them.    Be sure to enter the payments you did make in the Estimates section.   The amounts you already paid will be subtracted from your tax liability.  The links above give instructions on how to get to those sections in TurboTax.

Form 941 Requirements - Form 941 reports federal income tax withheld from your employees, along with the employer's and employee's shares of social security and Medicare tax. 

[Mnpops]

I got the following answer but it did not work in the end.

Line 7 represents any amounts withheld from the household employee's wages, which should be included with your Form 941 if applicable.     Go through the Schedule H interview and enter all of your amounts and UE rates there.  TurboTax will calculate all of the taxes.  You will get the following screen where you can indicate you need to include unemployment taxes.    Be sure to enter the payments you did make in the Estimates section.   The amounts you already paid will be subtracted from your tax liability.  The links above give instructions on how to get to those sections in TurboTax.

I went through the interview and entered the amounts for wages and federal income tax withheld.  There was never a question asking me if I had already paid them, form 941 or otherwise.  At the end of the interview the total tax liability clearly included the amount I have already paid (form 941 quarterly).  My liability is not being reduced by the amount of federal income tax I've already paid in for my employees.  The program just uses the total liability it calculated and goes right into the federal review with smart check and then tells me there are no errors.

[RobertB4444 · Accepted solution]

If you have already paid them then by all means leave them off your schedule H.  There is clearly no point in including taxes you've already paid.

The reason this question has been so difficult to answer is because there is no reason to use the EFTPS system if you are filing schedule H and vice versa.  You should pick one method that works for you and use it.  Combining the two methods in this way will potentially confuse the IRS and a confused IRS is never a good thing.

@Mnpops 

[Mnpops]

Thank you.  That's a great answer.  The IRS instructions had me confused.  They seem to imply that filing form 941 every quarter is a hard requirement but it's OK to pay Social Security and Medicare taxes with schedule H.  And the nice thing about schedule H is that it cuts the FUTA down based on calculations in the form.  I'm not confident that form 941 would do that for me.