Geographic Variation in Schedule H Filing Rates: Why Should Location Influence the Decision To Report "Nanny" Taxes?

T he Schedule H is the Internal Revenue Service (IRS) form used to report Social Security and Medicare taxes on wages of $1,400 or more paid to household employees. The IRS defines a household employee as someone whose work details are controlled by the employer. A Schedule H is not required to be filed when household work is performed by an agency employee or by a self-employed individual. In the former case, the agency is responsible for work-related details such as who does the work and how it is done. Similarly, a self-employed individual is someone who controls his or her work schedule, provides their own tools or equipment, and offers services to the general public.