Household Employment

Pay someone to work in your home — a nanny, housekeeper, in-home caregiver for an aging parent, private chef, or gardener — and the tax code makes you an employer. The obligation is personal, not a deductible business expense: it rides on Schedule H attached to your own Form 1040, and it is never deductible on a Schedule C, because the labor produces no business income to deduct it against (a business owner may fold the payments into Form 941 and 940 deposits instead of Schedule H, which changes the plumbing, not the deduction). This is the nanny tax, and it is one of the most widely ignored rules in the code — right up until a divorce, a workers’-comp claim, or a cabinet nomination turns it into a headline.