J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return

38.4 Federal Unemployment Taxes (FUTA) for Household Employees

As an employer, you are also liable for FUTA (federal unemployment taxes) for 2012 if you paid cash wages of $1,000 or more for household services (by all household employees) during any calendar quarter of 2012 or in any calendar quarter of 2011. Your employee is not liable for FUTA. You must pay it with your own funds. You do not pay FUTA on wages paid to your spouse, your parents, or your children under age 21.

The FUTA rate is 6% of the first $7,000 of cash wages paid to each household employee in 2012. However, there is a credit of up to 5.4% for state unemployment taxes that reduces FUTA liability, resulting in a net tax of 0.6%. Only employers that pay all the required state unemployment fund contributions for 2012 by April 15, 2013 will receive the entire credit; the credit for contributions made after April 15, 2013 is limited to 90% of the pre-deadline credit.

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Caution

Reduced Credit for Some States

If you are in a state that owes money to the federal unemployment fund, your FUTA credit for state unemployment taxes is reduced on Schedule H.

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For wages paid to a household employee in 2012, you will generally report FUTA on Schedule H, which you attach to your Form 1040. If you have regular business employees, see 38.2 for more reporting options.