Outsourcing Schedule H to a Household Payroll Specialist
Busy tax preparation firms always encounter a few clients who come to them during busy season with household payroll that has not been attended to throughout the prior year. The client is most interested in fast turnaround of a W-2 form for their nanny or housekeeper, under pressure from their employee to get things together and meet the IRS deadline of January 31. The CPA, however, knows that the W-2 is just a small part of the puzzle. A W-2 and Schedule H alone will not resolve the problem.
Last minute requests by clients with household employees can cause the well-organized tax firms to get distracted by:
- Application for a Federal Employer Identification Number for the client;
- Application for a state unemployment tax account for the client;
- Collection of employee data including name, address and Social Security Number;
- Collection of wage data paid by quarter;
- Collection of deductions, if any, made from paychecks;
- Completion of late state unemployment tax returns – many of which have to be filed electronically;
- Completion of W-2 and W-3 returns;
- Filing of W-2 returns with the Social Security Administration, reports that were due January 31;
- Research into state requirements for Workers’ Compensation Insurance;
- And finally, incorporation of this data on to the client’s 1040 filing on the Schedule H.
It is time consuming work, often involving research by the tax professional who doesn’t prepare these forms routinely, and concerns that the client is not going to be happy with the billing rate charged to get this all caught up.
Schedule H Tax Preparation Outsourcing to a Payroll Specialist
Fortunately, there are household payroll and “nanny tax” firms that specialize in managing the Schedule H Preparation for CPA firms. These firms have payroll specialists that handle household employment on a year-round, routine basis, and have both the expertise and automation to streamline this process for the client. Additionally, this allows the accounting firm to reduce their administrative burden associated with the tedious Schedule H and payroll deadlines and focus on more profitable, higher value work. These household payroll specialists even prepare the Schedule H form making the transfer of information to the client’s final 1040 a snap.
Accounting firms are constantly seeking ways to optimize their staff, increase profitability and maximize the value they can deliver to their clients. HomeWork Solutions can help firms achieve their goals, while continuing to deliver concierge quality service they’ve come to expect from their CPA firm, ensuring client satisfaction.
HWS for Financial Professionals
Household Employment Schedule H v. Form 941
Questions to Ask a Nanny Payroll Service