My husband and I recently hired our daughter for her first earned income. We employed her as a household employee and, in 2019, she earned $1.70 from assisting with yard work. You can read more about her payment and funding her Roth IRA for the first time in “Funding a 3-Year-Old’s Roth IRA.”
As this was my first time being a household employer, I wanted to double check:
Do I need to file Schedule H because I employed my child as a household employee?
The Instructions for Schedule H state:
Who Needs To File Schedule H
You must file Schedule H if you answer “Yes” to any of the questions on lines A, B, or C of Schedule H
Those questions are as follows.
A Did you pay any one household employee cash wages of $2,100 or more in 2019? (If any household employee was your spouse, your child under age 21, your parent, or anyone under age 18, see the line A instructions before you answer this question.)
The line A instructions state:
To figure the total cash wages you paid in 2019 to each household employee, don’t include amounts paid to any of the following individuals.
- Your spouse.
- Your child who was under age 21.
- Your parent. (See Exception for parents below.)
- Your employee who was under age 18 at any time during 2019. If the employee wasn’t a student, see Exception for employees under age 18 below.
In this way, my answer is “No” to question A. As my child is under age 21, all of her wages regardless of their size are exempt from being counted in question A.
B Did you withhold federal income tax during 2019 for any household employee?
Although a parent household employer can withhold income taxes, there is no requirement or reason to for small sums. I did not. Thus, my answer to question B is “No.”
C Did you pay total cash wages of $1,000 or more in any calendar quarter of 2018 or 2019 to all household employees? (Don’t count cash wages paid in 2018 or 2019 to your spouse, your child under age 21, or your parent)
The “don’t count cash wages paid to… your child under age 21” means that regardless of the size of her wages, my answer to question C is “No.”
For this reason, I do not need to file Schedule H and imagine that most parent household employers also do not need to file this schedule.
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