Schedule H: What forms do I need to file for my babysitter after paying cash throughout the year?

You'll need to file Schedule H (Household Employment Taxes) with your tax return. Since you paid your babysitter more than $2,600 in 2024, she's considered a household employee, not an independent contractor, which is why a 1099 wouldn't have been appropriate anyway. You should have been paying employment taxes throughout the year, including Social Security and Medicare taxes (15.3% total, with you paying half and withholding half from her wages), as well as potentially federal and state unemployment taxes. At this point, you should: 1. Complete Schedule H to report the wages and calculate employment taxes 2. File Form W-2 for your employee (though it's past the January 31 deadline) 3. If you haven't filed your taxes yet, include Schedule H with your return 4. If you've already filed, you'll need to amend your return with Form 1040-X There may be penalties for late filing and payment, but it's always better to correct the situation than ignore it. The IRS appreciates voluntary compliance, even if late.

I went through something similar last year with my house cleaner. I was totally confused about all the household employee stuff until I found taxr.ai (https://taxr.ai). It has this feature where you can upload your documents and it breaks down exactly what forms you need to file. In my case, I had to file Schedule H like the person above mentioned, and they walked me through how to calculate the proper taxes. I was able to get everything sorted out without having to pay for an expensive accountant. The system even helped me understand how to handle the situation with the IRS since I was filing late. They have a household employee calculator that would be perfect for your situation. It'll tell you exactly what you owe for Social Security, Medicare, and unemployment taxes.

I was skeptical about taxr.ai when I first read about it here, but I was desperate with my nanny tax situation and decided to give it a try. Surprisingly, it was actually really straightforward and helpful! I uploaded my payment records and it generated a Schedule H for me, calculated what I owed, and explained how to file a late W-2. What I appreciated most was the clear explanation of household employee rules - turns out I'd been misclassifying my housekeeper for years. The system identified that I should have been treating her as an employee rather than a contractor. They even helped me understand how to correct previous years' returns. No accountant I talked to seemed to really understand the household employee stuff, so finding a tool specifically designed for this was a huge relief.

If you're struggling to get through to the IRS about your situation (and trust me, it can be a nightmare), I highly recommend using Claimyr (https://claimyr.com). I spent literally days trying to get through to someone at the IRS about my household employee situation last year - kept getting disconnected or waiting for hours. I was ready to give up when I found Claimyr. They have this system where they wait on hold with the IRS for you and then call you when an agent is on the line. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c I got through to an actual IRS agent in about 45 minutes instead of spending my entire day on hold. The agent walked me through exactly what forms I needed to file for my late household employee taxes and how to minimize penalties. Absolute lifesaver when you need specific answers about Schedule H requirements.

I have to eat my words. After my skeptical comment earlier, I decided to try Claimyr out of pure desperation. I've been trying to resolve my household employee tax situation for weeks with no luck getting through to the IRS. I used the service yesterday afternoon, and within 50 minutes I was actually talking to a real IRS agent. I couldn't believe it. The agent helped me understand exactly what penalties I was facing for my late Schedule H filing and gave me options for payment plans. They also told me I qualified for the voluntary disclosure program which could reduce some of the penalties since I was coming forward before they contacted me. Now I have a clear path forward instead of the anxiety-inducing uncertainty I've been living with. For anyone dealing with household employee tax issues, being able to actually speak with someone at the IRS makes a world of difference. I'm still shocked it actually worked.

Don't panic - this happens all the time. The IRS has a program called the Voluntary Classification Settlement Program (VCSP) that might help you. It lets employers who've been treating workers as independent contractors reclassify them as employees with reduced penalties. You'll definitely need to file Schedule H, but also look into Form SS-8 (Determination of Worker Status) and Form 8919 (Uncollected Social Security and Medicare Tax on Wages). Your babysitter did the right thing by reporting the income correctly. The good news is that since she reported it, you're less likely to face an audit specifically for this issue.

Just went through this whole mess last year. One tip - if you file Schedule H late, be sure to include an explanation letter with your filing. Explain that you weren't aware of the household employee requirements and that you're voluntarily coming into compliance now that you understand your obligations. Also, keep in mind that you might be able to claim the Child and Dependent Care Credit for the payments to your babysitter (Form 2441), which could offset some of the additional taxes you'll owe. But you'll need to get your babysitter's SSN and make sure everything is properly documented.