Filing Form 942: Guide for Household Employers

Filing Form 942: A Comprehensive Guide for Household Employers

If you’re a household employer—someone who hires household workers like nannies, housekeepers, or caregivers—you may be required to file Form 942 to report employment taxes related to your workers. This form helps you fulfill your tax reporting obligations for employees working in your household and ensures compliance with IRS guidelines. In this guide, we’ll provide a clear, step-by-step approach to filing Form 942, explain its purpose, and offer practical advice on how to avoid common mistakes.

What is Form 942?

Form 942, also known as Employer’s Quarterly Federal Tax Return for Household Employees, is used by household employers to report employment taxes for workers in the household. This includes workers who provide services like child care, cleaning, and other household management duties. If you pay your employee more than $2,400 per year (as of 2025), you’re required to report their wages and pay the associated taxes.

Form 942 is an annual filing, which means you must submit it to the IRS by January 31st of the following year to report all payments made to household employees during the previous year.

Who Needs to File Form 942?

You need to file Form 942 if you meet the following conditions:

• You hire household employees: These are individuals you hire to perform household services like cleaning, child care, or assistance with elderly relatives.
• You pay wages above the annual threshold: If you pay your employee $2,400 or more during the calendar year, you’re required to report this on Form 942. (This amount may change annually due to inflation adjustments.)
• You must withhold and pay employment taxes: If you’re withholding Social Security and Medicare taxes or are liable for Federal Unemployment Tax (FUTA), you must file the form.

In essence, if you pay an employee for household work and meet the income threshold, you are considered a household employer and are required to file this form.

Key Taxes Reported on Form 942

The primary taxes you need to report on Form 942 include:

1. Social Security and Medicare Taxes:

   • You are required to withhold 6.2% for Social Security and 1.45% for Medicare taxes from your employee’s wages.
   • Additionally, you are responsible for matching these amounts, paying an additional 6.2% for Social Security and 1.45% for Medicare.

2. Federal Unemployment Tax (FUTA):

   • FUTA taxes are typically 6% of the first $7,000 in wages paid to each employee, though you may be eligible for a credit for state unemployment taxes that reduces this rate to 0.6%.

Steps for Filing Form 942

1. Determine Who Is a Household Employee:

   • Ensure that the workers you are paying meet the criteria to be considered household employees. These workers are typically not independent contractors, and they are usually under your control regarding the hours, duties, and methods of their work.

2. Calculate Your Employee’s Wages:

   • Keep accurate records of the wages you pay to your household employees. If you pay more than $2,400 in a calendar year, you must report this income on Form 942.

3. Determine Your Tax Liabilities:

   • Calculate the appropriate Social Security and Medicare taxes you need to withhold and pay.
   • Calculate the FUTA tax if applicable. This is based on the first $7,000 in wages per employee.

4. Complete the Form:

   • Section 1: Employer Information: Provide your name, address, and Employer Identification Number (EIN).
   • Section 2: Employee Information: Enter the total wages you paid to household employees, and calculate the tax due for Social Security, Medicare, and FUTA.
   • Section 3: Calculate Total Tax Due: Sum up the amounts owed for Social Security, Medicare, and FUTA taxes.
   • Section 4: Payments: Report any estimated tax payments you’ve already made throughout the year.
   • Section 5: Signature: Sign the form to verify the accuracy of your reported information.

5. Submit Form 942:

   • Once completed, submit the form by the January 31st deadline following the end of the tax year.
   • You can submit Form 942 electronically or by mail. If you’re using mail, send it to the address specified in the form’s instructions. For electronic filing, you can use the IRS e-file system.

Common Mistakes to Avoid

1. Failing to Withhold Proper Taxes:

   • If you don’t withhold the correct amounts for Social Security, Medicare, or FUTA, you could face penalties. Be sure to correctly calculate the taxes owed based on your employee’s wages.

2. Incorrect Reporting of Employee Wages:

   • Only wages that meet the FUTA wage base and are subject to Social Security and Medicare taxes should be reported. Double-check your records to ensure accuracy.

3. Late Filing or Payments:

   • Filing Form 942 after the deadline can result in penalties. Be sure to file by January 31st to avoid late fees. Additionally, if you owe taxes, be sure to pay them promptly.

4. Confusing Household Employees with Independent Contractors:

   • Independent contractors are not subject to the same tax reporting requirements as household employees. If you treat someone as an independent contractor when they should be classified as an employee, you could face penalties.

5. Overlooking State Requirements:

   • In addition to federal taxes, many states have their own reporting requirements for household employees. Ensure that you’re also complying with state-level employment tax rules.

Payment Methods for Taxes

You can pay your household employment taxes through several methods:

1. Electronic Federal Tax Payment System (EFTPS):
   The EFTPS is the IRS’s online payment system, which allows you to pay taxes securely and on time.

2. Check or Money Order:
   If paying by check, make sure it’s payable to the U.S. Treasury and sent with your form. Include the appropriate forms or payment vouchers to ensure proper credit to your account.

What to Do If You Made a Mistake

If you discover that you’ve made an error after submitting Form 942, you can correct it by filing an amended return. You’ll need to submit Form 942-X to correct any mistakes related to wages, taxes, or payment amounts.

Conclusion

Form 942 is an essential tool for household employers to report and pay employment taxes for employees working in the household. Filing the form accurately and on time ensures you stay in compliance with IRS regulations and avoid unnecessary penalties.