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Posted by curiousgeorge408 on January 15, 2008, 7:51 pm
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The CA household employer payroll taxes are paid to the
Employment Development Department. They are not paid
as part of the state income tax.
Are such employer payroll taxes deductible on Form 1040?
If so, where is that amount reported on Form 1040?
If CA household employer payroll taxes are not deductible
because they are paid separately, it would seem unfair if
other states include household employer payroll taxes in
"income" taxes, as Form 1040 does (Sched H). In such
cases, the household employer payroll tax would effectively
be deductible because it is "hidden" in the state income tax
deduction on Sched A.
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Posted by Katie on January 15, 2008, 9:44 pm
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On Jan 15, 4:51 pm, curiousgeorge...@hotmail.com wrote:
> The CA household employer payroll taxes are paid to the
> Employment Development Department. They are not paid
> as part of the state income tax.
>
> Are such employer payroll taxes deductible on Form 1040?
> If so, where is that amount reported on Form 1040?
>
> If CA household employer payroll taxes are not deductible
> because they are paid separately, it would seem unfair if
> other states include household employer payroll taxes in
> "income" taxes, as Form 1040 does (Sched H). In such
> cases, the household employer payroll tax would effectively
> be deductible because it is "hidden" in the state income tax
> deduction on Sched A.
>
State and federal income tax withholding, FICA, FUTA, SUI, and CA-SDI
for household employees are not deductible for either federal or state
income tax purposes. If the person was employed in your trade or
business, you could deduct the salary and the payroll taxes as
business expenses. Such payments on behalf of a household employee
are nondeductible personal expenses.
If you withhold FIT or SIT for your household employee, that
represents the employee's federal or state income tax liability which
you withhold and forward to the government on your employee's behalf.
It has nothing to do with your own income tax. CA-SDI (state
disability insurance), if your employee is subject, is also withheld
from the employee's wages. Again, it is your employee's expense, not
yours, and it is not income tax.
State unemployment insurance (SUI) is a tax that you pay into the
unemployment insurance fund to provide benefits for workers who become
unemployed through no fault of their own. It is not an income tax.
Since it is paid on behalf of a household employee, it is a personal,
nondeductible expense.
On Schedule H (Form 1040) you also report and pay the employer's half
of FICA (Social Security and Medicare), which is your personal,
nondeductible expense, and pay over the employee's half, which you
have withheld from your employee's compensation. These are not income
taxes and are not treated as such by either IRS or any state.
Katie in San Diego
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<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
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<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
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Posted by Harlan Lunsford on January 16, 2008, 5:04 pm
Please log in for more thread options Katie wrote:
> State and federal income tax withholding, FICA, FUTA, SUI, and CA-SDI
> for household employees are not deductible for either federal or state
> income tax purposes. If the person was employed in your trade or
> business, you could deduct the salary and the payroll taxes as
> business expenses. Such payments on behalf of a household employee
> are nondeductible personal expenses.
(snippped a bunch here for brevity....)
Ordinarily I always admantly and perpetually agree in toto with Katie.
(grin!
But the exception proves the rule and I have indeed deducted said taxes
for a client. (!)
It was in the case of household employee being a caregiver and attending
a taxpayer with Alzheimer's of course, and these were medical expenses.
(Gotcha!)
ChEAr$,
Harlan Lunsford, EA n LA
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by Katie on January 18, 2008, 1:40 am
Please log in for more thread options > Katie wrote:
> > State and federal income tax withholding, FICA, FUTA, SUI, and CA-SDI
> > for household employees are not deductible for either federal or state
> > income tax purposes. If the person was employed in your trade or
> > business, you could deduct the salary and the payroll taxes as
> > business expenses. Such payments on behalf of a household employee
> > are nondeductible personal expenses.
>
> (snippped a bunch here for brevity....)
>
> Ordinarily I always admantly and perpetually agree in toto with Katie.
> (grin!
>
> But the exception proves the rule and I have indeed deducted said taxes
> for a client. (!)
>
> It was in the case of household employee being a caregiver and attending
> a taxpayer with Alzheimer's of course, and these were medical expenses.
>
> (Gotcha!)
>
> ChEAr$,
> Harlan Lunsford, EA n LA
>
Yep, Harlan, ya got me!
Katie
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by anona.muss on January 30, 2008, 7:57 pm
Please log in for more thread options Thank you for answering this question! I have a similar question and
tried to call the IRS for help to no avail.
For our nanny for 2007, we withheld federal taxes (income, medicare,
social security, futa, etc.) and made estimated payments to the IRS
for these payments. We also made similar estimated payments to the
state for state income taxes as well as state unemployment taxes.
Could someone confirm that the following is a correct description of
how to report this on the 1040?
1) Schedule H is completed with regard to the federal obligations due
for the employee and the total amount of federal taxes due (both from
the employee's withholdings and the employer's portion) is reported on
line 62 of form 1040.
2) all estimated federal tax payments (whether for the employee's
withheld portion or the employer's portion of social security and
medicare) are added together and reported on line 65 of form 1040.
3) any payments made to the state taxing authority for estimated state
income taxes for the employee are NOT counted in the employer's state
income tax deductions in Schedule A, line 5a.
4) any payments made to state unemployment agencies for the employee
are NOT eligible to be deducted as "other state taxes" on Schedule A,
line 8.
Thank you! There is absolutely no information about this on the IRS
website.
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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