Form 1040 Schedule H,

[ttbtaxes]

Client had a domestic employee in 2017 and never told me about it. He used a payroll company to do the appropriate withholdings and the P/R company made the deposits to the IRS for those taxes. Everything was done correctly from a payroll point of view. Nothing is owed.

I have to file an amended return and will prepare the 2017 Schedule H that reports the wages, federal withholding, FICA , Medicare and FUTA and totals the taxes. That tax amount gets brought over to Line 60a of Form 1040 "Other Taxes".

What line on Form 1040 would I show the Federal tax deposits made by the payroll company? It will be a wash but I can't find what line to put it on.

[Jiggers]

What IRS return did the payroll company use to make the deposits? You have to identify the return that is being filed for the deposit.

To do a deposit for FUTA you designate 940 on EFTPS.

I never heard of anyone paying the payroll taxes on household labor using EFTPS.

Did the payroll company also issue a W-2?

[ttbtaxes]

Yes, the payroll company prepared W-2s, 940, and other returns related to payroll. They got an EIN for the client and the payroll company actually prepared a Schedule H (which I never got until now). On that form, they recorded both the taxpayer SSN and an EIN below it so the two can be referenced.

For the life of me, I can't find a line on the 1040 to show the payments made for the taxes on Schedule H. I'm guessing I would put it on Line 73 and attach a statement. Any thoughts?

[Burke]

What line on Form 1040 would I show the Federal tax deposits made by the payroll company? It will be a wash but I can't find what line to put it on.

Where did the payroll company get the monies to make the deposits? Did the taxpayer make quarterly payments to them? Did the TP withhold fed, state, FICA from wages and use those funds to send to PR company? Did they bill the TP for preparing 941, 940, and W-2?

Normally tax payments made by the TP would be treated as estimated tax payments on the 1040 or are paid at the time 1040 is filed. Schedule H is used to allow the TP to pay or account for all at one time when they file. If this is not happening, Schedule H is not the document to file this year. If you do this, the TP is paying the taxes twice! If you show the paid taxes under estimated taxes, (suggested by TurboTax at one time) I fear the IRS will never match it and the TP will likely get a bill or CP2000. If you have already filed without Schedule H, I don't see any reason for an amended return, but the TP may want to rethink this procedure for future years. I am sure this is costing more than a simple Schedule H would.

Line 73 is for federal tax on fuels. Did you mean Line 74?

[Jiggers]

Did the payroll company report quarterly on the 941 and file the 941? You still haven't said what form the payroll company made the payroll tax deposit on.

If they reported it on the 941 and all the taxes were deposited on the 941, quarterly, then there is nothing you have to do.

Not correct in filing the 941, did the payroll company know this was for a domestic employee?

[Burke]

Not correct in filing the 941, did the payroll company know this was for a domestic employee?

It is permissible, they knew it, and these companies market it as the way to go. It is unnecessary however, when Schedule H is a simple option for a household employee, and there is no other existing business or farm where employees are paid that these can be added to. And I don't like that option either.

[Maude Lebowski]

I had a client with household help. A payroll service was used. We attached Schedule H to the tax return and showed the tax payments as estimated payments. I believe I did it this way based on the instructions given by the payroll service, which provided very good documentation to my client.

The client did this for three or four years and it was never an issue.

[ttbtaxes]

What triggered this issue was a letter from the IRS stating there was "credits" to the taxpayer's account for that year and they didn't know how to apply them. I'm going to have to file an amended return with the Schedule H and reflect the payments somewhere. In the instructions for the 1040, there is no mention of where to credit payments made for household employees. I didn't see anything mentioned in the instructions for estimated tax payment line.

For Line 74 (Line 73 in 2017) the instructions say, "If you made a tax payment that doesn't belong on any other line, include the payment on line 74. Check box d and enter “Tax” in the space next to that box."

[Burke]

What triggered this issue was a letter from the IRS stating there was "credits" to the taxpayer's account for that year and they didn't know how to apply them.

In that case, I am assuming the payroll company reported the payments under the TP's SSN and they are credited by the IRS under estimated taxes. Does the letter specify this? Note ML's post above where this was done for several years and no issues. Line 73 has a box to check for "Other" and a worksheet (in my software) where you can type in Schedule H. I would assume this would work also and may be the better option. Since you are doing an amended return, you can explain all this in Part II of 1040X.