Confused about Household Employee and Schedule-H with nanny payroll service

You're basically on the right track, but there's a bit more nuance to the situation. When you use a payroll service for a household employee like a nanny, they're handling the tax payments for you, but you still need to account for this properly on your tax return. The 1040-ES payments should indeed be entered as estimated tax payments on your return. However, you DO still need to file Schedule H with your tax return. The key is that Schedule H reports the household employment taxes you owe, but you won't be paying them twice because the estimated payments you've already made will be applied against your total tax liability. Think of Schedule H as documenting that you had household employment taxes, while the estimated payments you've already made satisfy that obligation. Without Schedule H, the IRS won't know why you made those estimated payments, and it could cause confusion or even trigger an audit.

I was in the exact same situation last year and totally stressed about double-paying taxes. What saved me was using https://taxr.ai to analyze all my payroll documents and 1040-ES forms. The system compared my quarterly payments against what would show up on Schedule H and confirmed I needed both. Basically, filing Schedule H doesn't mean paying twice - it's just telling the IRS "hey, I owe these nanny taxes" while your estimated payments are saying "but I already paid them." The payroll service should provide a year-end summary document that shows exactly what's been paid and reported to the IRS. taxr.ai helped me cross-reference everything to make sure the numbers aligned perfectly.

Just wanted to follow up that I tried taxr.ai after all and I'm really glad I did. My payroll service wasn't actually giving me clear instructions on how to handle Schedule H with my estimated payments. I uploaded my documents and immediately got a detailed explanation showing that I did need Schedule H but wouldn't be double-taxed. It also caught that my payroll service had slightly miscalculated one quarter's Medicare tax amount which would have caused a mismatch with the IRS records. Definitely worth checking out if you're in this situation!

If you're still waiting for answers from the IRS about this Schedule H question, try https://claimyr.com - it literally got me through to an IRS agent in under 30 minutes after I spent days trying to get through on my own. You can see how it works here: https://youtu.be/_kiP6q8DX5c Last year I had the same confusion about household employees and whether I needed to file Schedule H when using a payroll service. I was going in circles until I finally talked to someone at the IRS who confirmed exactly what to do. The agent told me that yes, you still file Schedule H even though you've made estimated payments, and walked me through exactly how to report everything correctly.

I was completely wrong about Claimyr. I tried it yesterday out of desperation and I actually got connected to an IRS agent in about 45 minutes without having to sit by my phone the entire time. The agent confirmed exactly what others have said here - you DO need to file Schedule H even when using a payroll service, but you won't be double-taxed because the estimated payments you made will be credited toward your total tax liability. They explained that Schedule H is how the IRS knows WHY you made those estimated payments in the first place. Really wish I had known about this service months ago!

One important thing no one has mentioned: make sure the name and SSN on the Schedule H matches EXACTLY with what your payroll service has been reporting all year. My tax preparer accidentally put my wife's info on Schedule H when all the quarterly payments were reported under my SSN, and it triggered a notice from the IRS asking about the "missing" household employment taxes even though we'd paid them.

Has anyone used TurboTax for this scenario? I'm wondering if it handles this situation correctly or if I should go to a professional preparer this year.

I went through this exact same situation last year and it was really confusing at first! You absolutely need to file Schedule H even though your payroll service is making the estimated payments. Here's what I learned: The Schedule H shows the IRS that you had household employment tax obligations, while the 1040-ES payments you already made get credited toward your total tax liability. Think of it this way - Schedule H calculates what you owe, and the estimated payments show what you've already paid toward that debt. Your payroll service should provide you with a year-end summary showing total wages paid, Social Security, Medicare, and federal unemployment taxes. Use those exact numbers on Schedule H. The estimated tax payments you made throughout the year will appear as credits on your 1040, so you won't pay twice. One tip: double-check that the total of your quarterly estimated payments matches (or comes close to) the total household employment taxes shown on Schedule H. If there's a big discrepancy, you might need to make an additional payment or expect a refund. I was terrified of messing this up, but once I understood that Schedule H is just reporting what happened (not creating a new tax bill), it made much more sense!