If you must file a 2003 Form W-2, Wage and Tax Statement, for any household employee, you must also send Form W-3, Transmittal of Wage and Tax Statement, with Copy A of Form(s) W-2 to the Social Security Administration.

You must file Schedule H (Form 1040) if you answer “Yes” to any of the questions on lines A, B, or C.

Cash Wages.   Cash wages include wages paid by checks, money orders, etc. Cash wages do not include the value of food, lodging, clothing, or other noncash items you give a household employee.

  

  For 2003, you can give your employee as much as $100 a month for his or her expenses to commute to your home by public transportation (bus, train, etc.) without the repayment counting as cash wages. However, if you gave the employee more than $100 a month for these expenses, include the amount over $100 as wages.

You must file Form W-2 for each household employee to whom you paid $1,400 or more of cash wages in 2003 that are subject to social security and Medicare taxes. To find out if the wages are subject to these taxes, see the instructions for Schedule H, lines 1 and 3, on page H-3. If the wages are not subject to these taxes but you withheld Federal income tax from the wages of any household employee, you must file Form W-2 for that employee.

If you file one or more Forms W-2, you must also file Form W-3.

If you do not have an EIN, see Form SS-4, Application for Employer Identification Number. The instructions explain how you can get an EIN immediately over the internet, by telephone, or in about 4 weeks if you apply by mail. See How To Get Forms and Publications on page H-5 for details on how to get forms and publications including Form SS-4. Do not use a social security number in place of an EIN.

It is unlawful to employ an alien who cannot legally work in the United States. When you hire a household employee to work for you on a regular basis, you and the employee must each complete part of the U.S. Citizenship and Immigration Services (USCIS) Form I-9, Employment Eligibility Verification. The Bureau was formerly called the Immigration and Naturalization Service, or INS. You must verify that the employee is either a U.S. citizen or an alien who can legally work and you must keep Form I-9 for your records. You can get the form and the USCIS Handbook for Employers by calling 1-800-870-3676, or by visiting the USCIS website at www.uscis.gov.

If you employed a household employee in 2003, you probably have to pay contributions to your state unemployment fund for 2003. To find out if you do, contact your state unemployment tax agency right away. You should also find out if you need to pay or collect other state employment taxes or carry workers' compensation insurance.

If you file any of the returns listed below for 2003, remember to attach Schedule H to it. Mail your return by April 15, 2004, to the address shown in your tax return booklet. Exceptions. If you get an extension of time to file your return, file it with Schedule H by the extended due date. If you are a fiscal year filer, file your return and Schedule H by the due date of your fiscal year return, including extensions.

If you are not required to file a 2003 tax return (for example, because your income is below the amount that requires you to file), you must file Schedule H by April 15, 2004. Complete Schedule H and put it in an envelope with your check or money order—do not send cash. See the list of addresses on the back cover of this booklet. Mail your completed Schedule H and payment to the address listed for the place where you live. Make your check or money order payable to the “United States Treasury” for the total household employment taxes due. Enter your name, address, social security number, daytime phone number, and “2003 Schedule H” on your check or money order. Household employers that are tax-exempt, such as churches, may file Schedule H by itself.

By February 2, 2004, you must give Copies B, C, and 2 of Form W-2 to each employee. You will meet this requirement if the form is properly addressed, mailed, and postmarked no later than February 2, 2004.

By March 1, 2004, (March 31, 2004 if you file electronically) send Copy A of all Forms W-2 with Form W-3 to the Social Security Administration (SSA). If an envelope addressed to the SSA came with this booklet, please use it. Do not mail your Schedule H in the envelope. If you do not have the envelope, mail Copy A of all Forms W-2 with Form W-3 to the

For certified mail, the ZIP code is 18769-0002. If you use a carrier other than the U.S. Postal Service, add “ATTN: W-2 Process, 1150 E. Mountain Dr.” to the address and change the ZIP code to “18702-7997.”

If you were notified that your household employee received payments from a state disability plan, see page H-5.

FUTA tax, with state unemployment systems, provides for payments of unemployment compensation to workers who have lost their jobs. Most employers pay both a Federal and state unemployment tax.

The FUTA tax rate is 6.2%. But see Credit for Contributions Paid to State below. Do not deduct the FUTA tax from your employee's wages. You must pay it from your own funds.

If you file Form W-2, you must also file Form W-3.

The titles of the boxes tell you what information to enter. The completed Forms W-2 and W-3 in the example (see page H-7) show how the entries are made.

Employee's Portion of Taxes Paid by Employer.   If you paid the employee's share of social security and Medicare taxes, the following rules apply. See pages H-5, H-6, and H-7.

• Enter the amount you paid for the employee in boxes 4 and 6 (do not include your share of these taxes).
• Add the amounts in boxes 4 and 6 to the amount in box 3 (or box 5 if that amount is larger).
• Enter the total in box 1.

  

  On Form W-3, put an “X” in the “Hshld. emp.” box of box b.

The tax rates mentioned in the instructions for Parts I and II of Schedule H will not change. The 2004 Employee Social Security and Medicare Tax Withholding Table is in Pub. 926, Household Employer's Tax Guide.

You may need to increase the Federal income tax withheld from your pay, pension, annuity, etc. or pay estimated tax payments to avoid an estimated tax penalty based on your household employment taxes (line 27). You may increase your Federal income tax withheld by filing a new Form W-4, Employee's Withholding Allowance Certificate, or Form W-4P, Withholding Certificate for Pension or Annuity Payments. Make estimated tax payments by filing Form 1040–ES, Estimated Tax for Individuals. For more information, see Pub. 505, Tax Withholding and Estimated Tax.

You must keep copies of Schedule H and related Forms W-2, W-3, W-4, and W-5, Earned Income Credit Advance Payment Certificate, for at least 4 years after the due date for filing Schedule H or the date the taxes were paid, whichever is later. If you have to file Form W-2, also keep a record of each employee's name and social security number. Each payday, you should record the dates and amounts of:

The EIC is a refundable tax credit for certain workers.

Do not use Schedule H if you chose to report employment taxes for your household employees along with your other employees on Form 941, Employer's Quarterly Federal Tax Return, or Form 943, Employer's Annual Federal Tax Return for Agricultural Employees. If you report this way, be sure to include your household employees' wages on your Form 940 (or Form 940-EZ), Employer's Annual Federal Unemployment (FUTA) Tax Return.

Certain state disability plan payments to household employees are treated as wages subject to social security and Medicare taxes. If your employee received payments from a plan that withheld the employee's share of social security and Medicare taxes, include the payments on lines 1 and 3 and complete the rest of Part I through line 5. Add lines 2, 4, and 5. From that total, subtract the amount of these taxes withheld by the state. Enter the result on line 6. Also, enter “disability” and the amount subtracted on the dotted line next to line 6. See the notice issued by the state for more details.

To get the IRS forms and publications mentioned in these instructions (including Notice 797), call 1-800-TAX-FORM (1-800-829-3676) or use one of the other sources listed in your income tax return instructions.

On February 14, 2003, Susan Green hired Helen Maple to clean her house every Wednesday. Susan did not have a household employee in 2002.

Susan paid Helen $50 every Wednesday for her day's work. Susan decided not to withhold Helen's share of the social security and Medicare taxes from the wages she paid Helen. Instead, she will pay Helen's share of these taxes from her own funds. Susan did not withhold Federal income tax because Helen did not give her a Form W-4 to request withholding and no withholding is otherwise required. Susan also did not pay Helen advance earned income credit payments because Helen did not give her a Form W-5.

Helen was employed by Susan for the rest of the year (a total of 46 weeks). The following is some of the information Susan will need to complete Schedule H, Form W-2, and Form W-3.