Updated October 19, 2026. Quick answer: Schedule H reports the tax, but household employers may also owe Forms W-2 and W-3, an Earned Income Credit notice and a set of payday records. For 2025 the instructions set the monthly exclusion for qualified parking and for transit passes at $325 each. Paper Forms W-2 and W-3 had to be postmarked by February 2, 2026.
Quick reference
| Item | As the IRS form or instructions state it |
|---|---|
| Form and year read | Schedule H (Form 1040) for 2025 and its instructions |
| Monthly parking exclusion | “For 2025, the monthly exclusion for qualified parking is $325 and the monthly exclusion for commuter highway vehicle transportation and transit passes is $325.” |
| Wages under the Medicare tax threshold | “If the wages are below $2,800 for 2025 and you complete boxes 3, 4, 5, and 6 on Form W-2, the SSA will reject your Form W-2.” |
| Paper filing rule | “For paper forms, you will meet this requirement if the form is properly addressed, mailed, and postmarked no later than February 2, 2026.” |
| EIC wage figure | “You’re encouraged to notify each employee whose wages for 2025 were less than $61,555 ($68,675 if married filing jointly) that the employee may be eligible for the EIC for 2025.” |
| EIC notice without a W-2 | “If you’re not required to give the employee a Form W-2, you must provide the notification by February 9, 2026.” |
| Employee copies | “give Copies B, C, and 2 of Form W-2 to each employee.” |
When wages call for a Form W-2
Schedule H and Form W-2 are separate duties. The instructions add a rule that applies even when no social security or Medicare tax is due: “Even if the wages aren’t subject to these taxes, if you withheld federal income tax from the wages of any household employee, you must file Form W-2 for that employee.”
In that case the form is only partly filled in. The instructions say “However, when not subject to social security and Medicare taxes, leave boxes 3, 4, 5, and 6 blank on Form W-2; only complete boxes 1 and 2.” The same page gives the consequence of getting it wrong: “If the wages are below $2,800 for 2025 and you complete boxes 3, 4, 5, and 6 on Form W-2, the SSA will reject your Form W-2.”
Noncash pay is handled in box 1. The instructions say “Report the value of taxable noncash wages in box 1 of Form W-2 together with cash wages.”
Form W-3 and how the copies are sent
Form W-3 travels with the W-2 copies. The instructions say “Send one copy of Form W-3 with Copy A of Form(s) W-2 to the SSA, and keep one copy of Form W-3 for your records.” Electronic filers are told “If filing electronically via the SSA’s Form W-2 Online service, the SSA generates Form W-3 data from the electronic submission of Form(s) W-2.”
For the employee side and the paper deadline, the instructions say “give Copies B, C, and 2 of Form W-2 to each employee.” “For paper forms, you will meet this requirement if the form is properly addressed, mailed, and postmarked no later than February 2, 2026.”
One box on Form W-3 identifies the filer: “On Form W-3, put an “X” in the “Hshld. emp.” box located in box b, Kind of Payer.” On penalties, the instructions say “You may have to pay a penalty if you don’t give Forms W-2 to your employees or file Copy A of the forms with the SSA by the due dates.” For the form itself, see the Form W-3 instructions page.
Qualified parking and transit passes
Some commuting reimbursements may be excluded from the cash wages subject to social security and Medicare taxes. The What’s New section states the 2025 monthly amounts: “For 2025, the monthly exclusion for qualified parking is $325 and the monthly exclusion for commuter highway vehicle transportation and transit passes is $325.”
The instructions define the parking that qualifies: “Qualified parking is parking at or near your home or at or near a location from which your employee commutes to your home.” “It doesn’t include parking at or near your employee’s home.” Amounts above the exclusion are wages: “Any cash reimbursement over these amounts is included as wages.”
The Earned Income Credit notice
The instructions describe the credit as “The EIC is a refundable tax credit for certain workers.” A notice is required in one case: “You must notify your household employee about the EIC if you agreed to withhold federal income tax from the employee’s wages but didn’t do so because the income tax withholding tables showed that no tax should be withheld.”
The encouraged group is wider: “You’re encouraged to notify each employee whose wages for 2025 were less than $61,555 ($68,675 if married filing jointly) that the employee may be eligible for the EIC for 2025.” When no Form W-2 is required, the instructions say “you must provide the notification by February 9, 2026.” Employees then act on their own: “Eligible employees claim the EIC on their 2025 tax returns.”
Records to keep each payday
The instructions list what to write down: “Each payday, you should record and keep the dates and amounts of:” the items include “Cash and noncash wage payments,” “Any federal income tax you withhold, and” “Any state employment taxes you withhold.”
For employees who receive a Form W-2: “If you must file Form W-2, you will need to keep a record of each employee’s name, address, and SSN.” “Copies must be submitted to the IRS if requested.” The schedule itself is introduced on the Schedule H instructions page.
Where this comes from
The editions read for this page are Schedule H (Form 1040) (2025) and the Instructions for Schedule H (Form 1040) (2025), dated Dec 1, 2025, which are the revisions irs.gov served when they were read on 2026-10-19. Check the revision printed on the form you file, because a later revision can change the lines, the rates and the due dates. This page describes Schedule H (Form 1040) (2025), Household Employment Taxes; Instructions for Schedule H (Form 1040) (2025), as served on irs.gov on October 19, 2026. The IRS can revise a form after we read it, and the form you file and its own instructions control. Current and earlier revisions are listed on the IRS page Forms, Instructions and Publications. General information, not tax or legal advice.
Common mistakes
- Assuming no Form W-2 is needed when no Medicare tax is due. The instructions say “if you withheld federal income tax from the wages of any household employee, you must file Form W-2 for that employee.”
- Filling in every box on a low wage Form W-2. The instructions say the SSA “will reject your Form W-2” when boxes 3, 4, 5, and 6 are completed for wages below $2,800.
- Treating the parking exclusion as unlimited. The instructions say “Any cash reimbursement over these amounts is included as wages.”
- Counting parking near the employee’s own home. The instructions say “It doesn’t include parking at or near your employee’s home.”
Related: Schedule H instructions, Schedule H Part I, Schedule H Additional Medicare Tax, Form W-3 instructions, Form W-4, and Form 1040 line 27 earned income credit.
Sources
- Schedule H (Form 1040) (2025), Household Employment Taxes: https://www.irs.gov/pub/irs-pdf/f1040sh.pdf
- Instructions for Schedule H (Form 1040) (2025): https://www.irs.gov/pub/irs-pdf/i1040sh.pdf
Read from the IRS pages linked above on October 19, 2026. General information, not tax or legal advice. The IRS form and the instructions for your own form control, and your own facts decide the outcome.