eir tax or allows them to receive a payment from the IRS if they do not owe tax. You may have to make advance payments of part of your household employee's EIC along with the employee's wages. You also may have to give your employee a notice about the EIC.
Notice about the EIC
The employee's copy (Copy B) of the IRS 2013 Form W-2, Wage and Tax Statement has a statement about the EIC on the back.
Tip: If you give your employee that copy by January 31, 2014 (as discussed under Form W-2), you do not have to give the employee any other notice about the EIC.
Otherwise, you must give your household employee a notice about the EIC only if you agree to withhold federal income tax from the employee's wages but the income tax withholding tables show that no tax should be withheld. Even if not required, you are encouraged to give the employee a notice about the EIC if his or her 2013 wages are less than the amount shown in the instructions to 2014 Form W-5.
If you do not give your employee Copy B of the IRS Form W-2, your notice about the EIC can be any of the following:
- A substitute Form W-2 with the same EIC information on the back of the employee's copy that is on Copy C of the IRS Form W-2,
- Notice 797, Possible Federal Tax Refund Due to the Earned Income Credit (EIC), or
- Your own written statement with the same wording as Notice 797.
If you give your employee a substitute Form W-2 on time which lacks the required EIC information, you must give notice about the 2014 EIC to the employee within one week of the date you gave him or her the substitute Form W-2. If Form W-2 is required, but not given on time, you must give the employee notice about 2014 EIC by January 31, 2015. If Form W-2 is not required, you must give your notice to the employee by February 2, 2015.
When you file your 2014 federal income tax return in 2015, attach Schedule H, Household Employment Taxes. Use this Schedule, discussed further below, to figure your household employment taxes. You will add the federal employment taxes on the wages you pay to your household employee in 2014, less any advance earned income credit payments you make to the employee, to your income tax. The amount you owe with your return is due to the IRS by April 15, 2015.
Tip: You can avoid owing tax with your return if you pay enough federal income tax before you file to cover the employment taxes for your household employee, as well as your income tax. If you are employed, you can ask your employer to withhold more federal income tax from your wages in 2014. If you get a pension or annuity, you can ask for more federal income tax withholding from your benefits. Or you can make estimated tax payments for 2014 to the IRS, or increase your payments if you already make them.
Asking for More Federal Income Tax Withholding
If you are employed and want more federal income tax withheld from your wages to cover the employment taxes for your household employee, give your employer a new Form W-4, Employee's Withholding Allowance Certificate. Complete it as before, but show the additional amount you want withheld from each paycheck on line 6.
If you get a pension or annuity and want more federal income tax withheld to cover the employment taxes for your household employee, give the payer a new Form W-4P, Withholding Certificate for Pension or Annuity Payments (or a similar form provided by the payer). Complete it as before, but show the additional amount you want withheld from each benefit payment on line 3.
Paying Estimated Tax
If you want to make estimated tax payments to cover the employment taxes for your household employee, get Form 1040-ES, Estimated Tax for Individuals. Use its payment vouchers to make your payments. You can pay all of the employment taxes at once or in installments. If you have already made estimated tax payments for 2014, you can increase your remaining payments to cover the employment taxes. Estimated tax payments for 2014 are ordinarily due April 15, June 16, September 15, 2014 and January 15, 2015.
Payment Option for Business Employers
If you own a business as a s