Yes, household employers can file Form 940 — but most household employers should not. The IRS designed Schedule H (Form 1040) as the standard way for household employers to report Federal Unemployment Tax Act (FUTA) obligations, along with Social Security and Medicare taxes. Filing Form 940 instead of Schedule H creates unnecessary complexity, extra quarterly deadlines, and a real risk of double-reporting taxes that can trigger penalties and audit flags.
Under 26 U.S.C. § 3306(a), the FUTA threshold for household employers is just $1,000 in cash wages paid to all household employees in any single calendar quarter — far lower than the $1,500-per-quarter general employer threshold. According to the Bureau of Labor Statistics, over 2.2 million people work as household employees in the United States, yet studies show that fewer than 10% of household employers fully comply with federal employment tax obligations. That gap exists because the rules are confusing, the forms overlap, and the consequences feel distant — until an IRS notice arrives.
Here is what you will learn in this article:
- 📋 Whether you need to file Form 940 or Schedule H — and why the distinction matters for your specific situation
- 💰 How FUTA taxes work for household employers, including the $7,000 wage base, the 6.0% rate, and the 5.4% credit
- ⚠️ The exact penalties you face for late filing, late payment, or failing to pay FUTA tax
- 🏠 Three real-world scenarios showing how household employers handle FUTA in practice — with action-and-consequence tables
- 🗺️ How credit reduction states like California raise your FUTA costs and what to do about it
What Is Form 940?
Form 940 is the IRS form that employers use to report and pay their annual Federal Unemployment Tax. FUTA funds the federal-state unemployment compensation program, which provides temporary income to workers who lose their jobs through no fault of their own. Every employer who meets certain wage or employment thresholds must file this form once per year.
The FUTA tax rate is 6.0% on the first $7,000 of wages paid to each employee during the calendar year. However, employers who pay their state unemployment taxes on time receive a credit of up to 5.4%, which brings the effective FUTA rate down to 0.6%. That means the maximum FUTA tax per employee is just $42 per year. The employer pays this tax entirely — you never withhold FUTA from your employee’s wages.
Form 940 has seven parts spread across two pages. It collects your total payments to employees, calculates exempt wages, determines FUTA-taxable wages, applies the tax rate, accounts for state unemployment credits, and reconciles your deposits against the total tax owed. The IRS requires Form 940 to be filed by January 31 of the following year, though employers who deposited all FUTA tax on time get an automatic extension to February 10.
Who Files Form 940?
Under the IRS general test, a business employer must file Form 940 if it meets either of two conditions: (1) it paid wages of $1,500 or more to employees in any calendar quarter, or (2) it had one or more employees for at least part of a day in 20 or more different weeks during the current or prior year. These thresholds apply to commercial businesses, nonprofits, and other organizations with non-household, non-agricultural workers.
Household employers operate under a separate and lower threshold. You owe FUTA tax if you paid total cash wages of $1,000 or more in any calendar quarter to all household employees combined. You do not need to meet the 20-week test. This lower bar means that most families who hire a regular nanny, housekeeper, or senior caregiver will trigger the FUTA obligation within just a few months.
The critical distinction is how you report that FUTA tax. The IRS directs household employers to use Schedule H (Form 1040) — not Form 940. Form 940 is designed for business employers. Household employers only file Form 940 if they also have business employees and choose to combine their household and business payroll tax reporting on the business forms.
Schedule H vs. Form 940: The Core Difference
Schedule H is an annual form that attaches to your personal Form 1040 income tax return. It handles Social Security taxes, Medicare taxes, any withheld federal income tax, and FUTA tax — all in a single filing. You complete it once per year in April when you file your personal return. It replaces the need to file Form 940, Form 941, and any other quarterly employment tax forms.
Form 940, by contrast, is a standalone annual filing due January 31. If you choose to report household employees on Form 940, the IRS also requires you to file Form 941 every quarter to report Social Security, Medicare, and withheld income taxes. That means you go from one annual filing (Schedule H) to five separate filings per year (four quarterly 941s plus one annual 940). Missing even one of those quarterly 941 deadlines — even when you owe $0 — triggers a failure-to-file penalty.
The IRS established Schedule H in 1995 to simplify household payroll tax reporting. HomeWork Solutions, a leading household payroll firm, calls Schedule H the “best practice for all household employers” because it reduces filings, avoids confusion, and prevents the common problem of double-reporting that happens when families use both Form 941 and Schedule H by mistake.
| Feature | Schedule H (Form 1040) | Form 940 + Form 941 |
|---|---|---|
| Filing frequency | Once per year (with personal return) | 5 times per year (4 quarterly + 1 annual) |
| Reports FUTA | Yes (Part II) | Yes (Form 940 only) |
| Reports Social Security/Medicare | Yes (Part I) | Yes (Form 941 only) |
| Designed for | Household employers | Business employers |
| Risk of double-reporting | Low | High |
| Penalty exposure for missed filings | 1 potential missed deadline | 5 potential missed deadlines |
When a Household Employer Should File Form 940
There is one situation where filing Form 940 makes sense for a household employer. If you are a sole proprietor who runs a business with employees and you also employ household workers at your home, you can combine everything onto the business payroll forms. In this case, you report your household employee’s wages on Form 940 alongside your business employee wages, and you report Social Security and Medicare on Form 941 (or Form 944 if you qualify for annual filing).
This option exists as a convenience for people who already file business payroll forms. It eliminates the need to file both business payroll forms and Schedule H. However, the IRS makes clear that the household employee remains an employee of your household, not your business. You cannot deduct household employee expenses from your business income — even if you report the taxes on the same form. The wages go on your personal return, and any attempt to claim them as a business deduction can trigger complications during an audit.
If you are not a sole proprietor with business employees, you should file Schedule H. Period. Filing Form 940 as a household-only employer forces you into the quarterly 941 system without any benefit. It also creates confusion for CPAs, who may then also prepare a Schedule H because their tax organizer questionnaire asks about household employees — leading to the double-reporting trap.
How FUTA Tax Works for Household Employers
The $1,000 Quarterly Threshold
You owe FUTA tax for 2026 if you pay total cash wages of $1,000 or more in any calendar quarter to all your household employees combined. A calendar quarter is January through March, April through June, July through September, or October through December. You do not count wages paid to your spouse, your child under age 21, or your parent.
Once you cross the $1,000 threshold in any quarter — even if it happens only once — you owe FUTA tax on wages paid to each household employee for the entire year. The threshold is a trigger, not a per-quarter calculation. This catches many household employers off guard. A family that hires a part-time babysitter for the summer at $300 per week will hit $1,000 in the very first quarter of employment.
The $7,000 Wage Base
FUTA tax applies only to the first $7,000 in cash wages you pay to each employee per year. Once an employee’s year-to-date wages reach $7,000, you stop accruing FUTA tax for that worker. For a full-time nanny earning $40,000 per year, you hit the $7,000 FUTA cap within the first two months. The maximum FUTA tax per employee — assuming the full 5.4% state credit — is just $42 ($7,000 × 0.6%).
The 6.0% Rate and the 5.4% Credit
The gross FUTA rate is 6.0%. But employers who pay state unemployment taxes on time receive a credit of up to 5.4%. This credit is not automatic — you earn it by paying your state unemployment insurance (SUI) contributions by the due date. If you pay state taxes late, your credit is reduced to 90% of what it would have been. The net effect of the full credit is an effective federal rate of 0.6%.
Deposit Rules
If your total FUTA tax liability exceeds $500 during any quarter, you must deposit the tax by the end of the month following that quarter. For most household employers with one or two employees, the total annual FUTA bill is well under $500, so no quarterly deposits are needed. You pay the full amount when you file Schedule H with your tax return. However, if you employ several household workers — a nanny, a housekeeper, and a personal cook, for example — your combined FUTA could exceed $500 in an early quarter, triggering the deposit rule.
Credit Reduction States: A Hidden Cost
A credit reduction state is a state that borrowed money from the federal government to pay unemployment benefits and has not repaid that loan. When a state remains in debt past November 10 of a given year, the U.S. Department of Labor imposes a credit reduction. This means your 5.4% FUTA credit shrinks, and your effective FUTA rate increases.
For the 2025 tax year, the IRS announced credit reductions for employers in California (1.2% reduction) and the U.S. Virgin Islands (4.5% reduction). Connecticut and New York, which had reductions in 2024, repaid their federal loans and avoided the reduction in 2025. Any potential 2026 credit reductions will be announced by the IRS in late 2026.
If you live in a credit reduction state, your FUTA cost per employee rises. For California in 2025, the effective FUTA rate is 1.8% (0.6% base + 1.2% credit reduction) instead of 0.6%. On $7,000 of wages, that means $126 per employee instead of $42. You report this extra amount on Schedule A (Form 940) if you file Form 940, or by checking “No” on line 10 of Schedule H and completing Section B of Part II.
The credit reduction penalty increases by 0.3% for each additional year the state remains in debt. California has been in credit reduction status since 2023, and each year the reduction climbs. Household employers in these states need to budget accordingly.
Walking Through Schedule H, Part II (FUTA Section)
Since most household employers use Schedule H, understanding Part II is essential. Here is every line in the FUTA section of Schedule H:
Line C (Page 1): This is the gateway question. It asks whether you paid total cash wages of $1,000 or more in any calendar quarter to all household employees. If you answer “No,” you skip Part II entirely and owe no FUTA. If you answer “Yes,” you proceed to line 10.
Line 10: Asks whether you paid unemployment contributions to only one state. If you paid contributions to a credit reduction state, you must check “No.” Most household employers check “Yes.”
Line 11: Asks whether you paid all state unemployment contributions by April 15 of the following year. Paying late reduces your FUTA credit. Checking “Yes” means you get the full 5.4% credit.
Line 12: Asks whether all FUTA-taxable wages were also taxable for your state’s unemployment tax. Most states tax the same wages, so most employers check “Yes.”
If all three answers (lines 10, 11, 12) are “Yes,” you complete Section A — the simple path. If any answer is “No,” you skip to Section B, which requires a more detailed computation.
Section A — Lines 13–16:
- Line 13: Enter the state where you paid unemployment contributions.
- Line 14: Enter the amount of contributions paid to your state fund.
- Line 15: Enter total cash wages subject to FUTA (the first $7,000 per employee).
- Line 16: Multiply line 15 by 0.6% (0.006). This is your FUTA tax.
Section B — Lines 17–24 applies to multi-state employers, late payers, or credit reduction state employers. It calculates the gross FUTA at 6.0%, determines the allowable credit, and arrives at your net FUTA tax. The math is more involved, but the result is the same concept: your FUTA liability after accounting for state credits.
Line 25–26 (Part III): These lines combine your Social Security/Medicare taxes from Part I with your FUTA tax from Part II to arrive at your total household employment tax. This total flows to Schedule 2 (Form 1040), line 9, where it increases your personal tax liability.
Walking Through Form 940 (For Those Who File It)
If you are a sole proprietor combining household and business employees on Form 940, you need to understand its seven-part structure:
Header: Enter your EIN (not your SSN), business name, trade name, and address.
Part 1 — Lines 1a, 1b, 2:
- Line 1a: If you paid state unemployment tax in one state only, enter its abbreviation.
- Line 1b: If you’re a multi-state employer, check the box and complete Schedule A (Form 940).
- Line 2: Check this box if you paid wages in a credit reduction state.
Part 2 — Lines 3–8 (Determining FUTA Tax):
- Line 3: Total payments to all employees during the year. Include all compensation — salaries, wages, bonuses, and non-cash fringe benefits.
- Line 4: Payments exempt from FUTA. This includes retirement plan contributions, group health plan payments, dependent care benefits, and other exempt categories. Check the appropriate boxes.
- Line 5: Wages paid to each employee over $7,000. Add the excess amounts across all employees.
- Line 6: Add lines 4 and 5.
- Line 7: Subtract line 6 from line 3. This is your total taxable FUTA wages.
- Line 8: Multiply line 7 by 0.006 (0.6%). If you qualify for the full state credit, this is your FUTA tax before adjustments.
Part 3 — Lines 9–11 (Adjustments): These lines handle situations where FUTA wages were excluded from state unemployment tax or state taxes were paid late.
Part 4 — Lines 12–15 (Tax Due or Overpayment): This reconciles your total FUTA tax against deposits already made. If you owe more than $500 by the end of any quarter, you must deposit that amount using the Electronic Federal Tax Payment System (EFTPS).
Part 5 — Lines 16a–16d: Report your FUTA tax liability by quarter. This helps the IRS verify that you made timely deposits.
Parts 6 and 7: Designee information and your signature.
Three Real-World Scenarios
Scenario 1: The Full-Time Nanny Who Crosses the Threshold
Maria hires a full-time nanny, Lisa, in January 2026 and pays her $600 per week. By mid-February, Maria has paid Lisa over $1,000 in the first quarter, triggering the FUTA obligation. Lisa’s wages hit $7,000 by late March. Maria lives in Texas, which has no credit reduction.
| What Happens | Tax Result |
|---|---|
| Maria pays Lisa $600/week starting January | FUTA obligation triggers in Q1 (over $1,000 in wages) |
| Lisa’s wages reach $7,000 in late March | FUTA taxable wages cap at $7,000 |
| Maria pays Texas SUI on time | Maria gets the full 5.4% FUTA credit |
| Maria calculates FUTA: $7,000 × 0.6% | Total FUTA tax owed = $42 |
| Total FUTA is under $500 | No quarterly deposit needed; Maria pays with Schedule H |
| Maria files Schedule H with her 1040 in April 2027 | FUTA and FICA taxes all reported in one filing |
Maria owes just $42 in FUTA for the entire year. She reports it on Schedule H, Part II, Section A. Because her total FUTA liability is well under $500, she does not need to make any quarterly deposits. She pays the $42 along with her Social Security and Medicare tax obligations when she files her personal return.
Scenario 2: The Sole Proprietor With Business and Household Employees
James runs a small landscaping business with three employees. He also employs a housekeeper, Rosa, at his home. James pays Rosa $500 per week. Because James already files Form 940 and Form 941 for his business, he decides to include Rosa’s wages on his business payroll forms.
| What Happens | Tax Result |
|---|---|
| James already files Form 940 for his business | He can add Rosa’s household wages to Form 940 |
| Rosa earns $26,000 per year; FUTA applies to first $7,000 | Rosa’s FUTA taxable wages = $7,000 |
| James lives in California (1.2% credit reduction in 2025) | Effective FUTA rate = 1.8% ($7,000 × 0.018 = $126) |
| James must also report Rosa on Form 941 quarterly | Social Security/Medicare reported each quarter |
| Rosa’s wages are not deductible as a business expense | James reports Rosa’s wages on his personal return, not Schedule C |
| James must file Schedule A (Form 940) for credit reduction | Extra form required due to California’s credit reduction status |
James pays $126 in FUTA for Rosa — $84 more than he would pay in a non-credit-reduction state. He includes Rosa’s wages on line 3 of Form 940 along with his business employees’ wages. He must remember that Rosa’s pay is not a business deduction even though it appears on a business form. James’s CPA must be careful not to also file a Schedule H, which would create a double-reporting problem.
Scenario 3: The Household Employer Who Fails to File
David hired a part-time caregiver for his elderly mother in 2025. He paid the caregiver $1,200 per month — well above the $1,000 quarterly threshold. David did not realize he was a household employer and filed no employment tax forms. In 2027, the IRS sends David a notice.
| What Happens | Tax Result |
|---|---|
| David pays $1,200/month to the caregiver ($14,400/year) | FUTA threshold triggered in Q1 |
| David files no Schedule H, no W-2, no state forms | IRS identifies the gap through SSA wage records |
| IRS assesses FUTA tax: $7,000 × 0.6% = $42 | David owes $42 in FUTA (assuming timely state SUI) |
| IRS assesses Social Security/Medicare: $14,400 × 15.3% = $2,203 | David owes both employer and employee shares |
| Late filing penalty: 5% per month up to 25% of unpaid tax | Potential penalty of up to $561 on the $2,245 owed |
| Failure-to-pay penalty + interest | Additional 0.5% per month on unpaid balance plus interest |
| No W-2 filed: $60–$310 penalty per form | Penalty for not furnishing W-2 to the employee |
David’s $42 FUTA bill balloons into a liability exceeding $3,000 when penalties, the full FICA obligation, and interest are added. The IRS imposes a late filing penalty of 5% per month on unpaid tax, capped at 25%. Late payment penalties range from 2% (1–5 days late) to 15% for amounts unpaid after IRS notice. David also faces penalties for not issuing a W-2 and potentially for not verifying the caregiver’s work eligibility with Form I-9.
Mistakes to Avoid
Filing Form 940 when you should file Schedule H. If you have only household employees and no business employees, filing Form 940 forces you into the quarterly 941 system. This creates five filing deadlines instead of one and increases your penalty exposure with no upside.
Ignoring the $1,000 quarterly FUTA threshold. Many families think they only owe taxes when they hit the Social Security/Medicare threshold ($2,800 in 2025, $3,000 in 2026). The FUTA threshold is lower and based on combined wages to all household employees. A family paying two part-time babysitters $600 each in a quarter has hit $1,200 — well above the FUTA trigger.
Counting excluded family members. Wages paid to your spouse, your child under 21, or your parent do not count toward the $1,000 FUTA threshold or the $7,000 wage base. Including them overstates your liability.
Paying state unemployment taxes late. Late state SUI payments reduce your FUTA credit. Instead of the full 5.4%, you receive only 90% of the credit you would have earned. On $7,000 of wages, this can increase your FUTA bill from $42 to over $80.
Double-reporting on both Form 941 and Schedule H. This is the most common and expensive mistake. If your CPA files Schedule H and you or a payroll service has already filed 941s, the IRS sees two reports of the same tax. The result is a doubled tax assessment, a doubled liability, and a lengthy correction process.
Failing to issue a W-2. Even if your household employee earned only $3,000, you must issue a W-2 if you withheld Social Security and Medicare taxes. The penalty for not filing or furnishing a W-2 ranges from $60 to $310 per form depending on how late you correct it.
Not getting an EIN. Household employers need an Employer Identification Number to file Schedule H, Form 940, or any employment tax form. You apply for an EIN online at IRS.gov/EIN and receive it immediately. Do not use your Social Security number on employment tax forms.
Do’s and Don’ts
Do’s
- Do use Schedule H if you only have household employees. It consolidates all employment taxes into one annual filing and reduces your risk of errors.
- Do pay state unemployment taxes on time. Your FUTA credit depends on timely state SUI payments. Missing a state deadline costs you real money on the federal side.
- Do track wages by calendar quarter. The $1,000 FUTA threshold is measured per quarter, not per year. Monitor wages paid in each three-month window.
- Do obtain an EIN early. Apply for one as soon as you hire a household employee. The process is free and instant online.
- Do communicate with your CPA. Tell your tax preparer exactly how you have been reporting household payroll so they do not duplicate filings.
Don’ts
- Don’t withhold FUTA from your employee’s pay. FUTA is an employer-only tax. Deducting it from your nanny’s paycheck violates IRS rules and short-changes your employee.
- Don’t file Form 940 without also filing Form 941. If you choose Form 940, the IRS requires quarterly 941 filings for Social Security and Medicare. One without the other triggers compliance notices.
- Don’t ignore credit reduction states. If you live in California or another affected state, your FUTA bill is higher than the standard $42. Budget for the additional cost.
- Don’t assume part-time workers are exempt. There is no part-time exemption for FUTA. If total wages to all household employees reach $1,000 in a quarter, the tax applies.
- Don’t skip filing just because the amount is small. A $42 tax bill can grow to thousands in penalties and interest if you ignore your filing obligations.
Pros and Cons of Filing Form 940 as a Household Employer
Pros
- Single payroll system if you already run a business. You manage all employees — household and business — through one payroll platform and one set of forms.
- Familiar to CPAs who handle business payroll. If your accountant already prepares Form 940, adding a household employee is straightforward for them.
- Consolidated federal reporting. All FUTA wages appear on one form rather than being split between Schedule H and Form 940.
- Easier multi-state reporting. If your business operates in multiple states and your household is in one of those states, Schedule A (Form 940) handles the multi-state calculation in one place.
- Alignment with payroll software. Most business payroll services generate Form 940 and 941 automatically. Schedule H often requires manual preparation.
Cons
- Five filings per year instead of one. Form 940 plus four quarterly 941s versus a single annual Schedule H.
- Higher penalty risk. Five potential missed deadlines means five opportunities for failure-to-file penalties.
- Double-reporting danger. CPAs may prepare Schedule H in addition to your 941s, creating a duplicate tax liability.
- Household wages are not a business deduction. Even though wages appear on a business form, you cannot deduct them on Schedule C. Mixing the two invites audit scrutiny.
- Complexity without benefit for household-only employers. If you have no business employees, Form 940 adds work with zero advantage.
Key Deadlines for Household Employers
| Deadline | What’s Due | Applies To |
|---|---|---|
| January 31 | Form 940 (if filing) | Household employers using Form 940 |
| February 1 | Forms W-2 and W-3 to SSA | All household employers who withheld taxes |
| February 10 | Extended Form 940 deadline | Only if all FUTA deposits were made on time |
| April 15 | Schedule H with Form 1040 | Household employers using Schedule H |
| End of month after each quarter | FUTA deposit (if liability exceeds $500) | All employers with quarterly FUTA over $500 |
If you use Schedule H, your main deadline is April 15 (or the applicable extension date for your personal return). If you use Form 940, you face the earlier January 31 deadline for FUTA, plus four quarterly 941 deadlines (April 30, July 31, October 31, and January 31).
How to Make FUTA Tax Payments
Most household employers pay their FUTA tax with their personal income tax return. You increase your estimated tax payments or adjust your W-4 withholding at your regular job to cover the additional liability. When you file your 1040 with Schedule H, the FUTA amount flows into your total tax due.
If your FUTA liability exceeds $500 in any quarter, you must deposit the excess using the Electronic Federal Tax Payment System (EFTPS). EFTPS is free and required for all federal tax deposits. You cannot pay quarterly FUTA deposits by check mailed with a return. Deposits are due by the last day of the month following the quarter in which the liability exceeded $500 — for example, April 30 for a first-quarter excess.
For household employers filing Form 940, any balance due after accounting for quarterly deposits must be paid by January 31 with the return. If you owe $500 or less for the entire year, you can pay the full amount with your Form 940 filing rather than making quarterly deposits.
Wages That Don’t Count Toward FUTA
Not every dollar you pay a household employee counts toward the FUTA $1,000 threshold or the $7,000 wage base. The IRS excludes several categories:
- Wages to your spouse performing household work — fully exempt from FUTA.
- Wages to your child under age 21 — fully exempt from FUTA.
- Wages to your parent — fully exempt from FUTA (no exceptions, unlike Social Security which has a narrow exception for parents caring for minor children).
- Wages to workers under age 18 — exempt from Social Security and Medicare (unless household work is their principal occupation), but still subject to FUTA if the $1,000 quarterly threshold is met for all household employees combined.
- Noncash wages — the value of food, lodging, and clothing provided to an employee is not counted as cash wages for FUTA.
- Qualified transportation benefits — up to $340/month for parking and $340/month for transit passes in 2026 are excluded from wages.
Understanding these exclusions prevents you from overpaying FUTA tax or triggering the obligation when it does not apply.
State Unemployment Tax Nuances
FUTA is the federal side of the unemployment tax system, but each state runs its own unemployment insurance program with its own rules. State unemployment tax rates vary based on your experience rating — a score that reflects your history of former employees claiming unemployment benefits. New employers typically receive a default rate, which can be higher or lower depending on the state.
Most states have wage bases higher than the federal $7,000. For example, some states set their unemployment wage base at $10,000, $15,000, or more. This means you may owe state unemployment tax on wages above the $7,000 FUTA cap. Contact your state unemployment tax agency to learn your specific rate and wage base.
Some states require household employers to register separately for state unemployment insurance. Others fold household employment into a personal income tax filing similar to how Schedule H works at the federal level. California, New York, and several other large states have specific household employer registration requirements. Failing to register can result in penalties at the state level that are entirely independent of your federal obligations.
FAQs
Do household employers have to file Form 940?
No. Most household employers file Schedule H (Form 1040) instead. You file Form 940 only if you also have business employees and choose to combine reporting.
Is FUTA tax withheld from a household employee’s wages?
No. FUTA is an employer-only tax. You pay it from your own funds and never deduct it from your employee’s paycheck.
What is the FUTA threshold for household employers?
$1,000 in total cash wages paid to all household employees in any calendar quarter. This is lower than the $1,500 general employer threshold.
How much is the maximum FUTA tax per household employee?
$42 per employee per year if you receive the full 5.4% state credit, calculated as $7,000 × 0.6%.
Can I file both Schedule H and Form 940?
No. You choose one or the other. Filing both results in double-reporting and a duplicated tax liability that requires correction.
What happens if I don’t pay FUTA tax?
Penalties accrue at 5% of unpaid tax per month (up to 25%), plus late payment penalties up to 15%, plus interest on the unpaid balance.
Does FUTA apply to a babysitter I pay occasionally?
It depends. If total cash wages to all household employees reach $1,000 in any quarter, FUTA applies — even for occasional workers.
Do I need an EIN to file Schedule H?
Yes. You must obtain an Employer Identification Number before filing any household employment tax forms with the IRS.
Are wages to my parent subject to FUTA?
No. Wages paid to your parent are fully excluded from FUTA tax regardless of the circumstances.
What is a credit reduction state?
A state that borrowed federal funds for unemployment benefits and has not repaid the loan, causing employers there to pay a higher effective FUTA rate.
Does California have a FUTA credit reduction?
Yes. For 2025, California employers face a 1.2% credit reduction, raising their effective FUTA rate to 1.8% per employee.
When is Schedule H due?
April 15 of the year following the tax year, filed with your personal Form 1040 income tax return.