Filing taxes as a nanny employer is one of the most important responsibilities that comes with hiring in-home childcare. But that doesn’t mean it has to be hard! 

While employing a nanny can transform your household in the best possible way, it also makes you a household employer in the eyes of the IRS. Understanding the rules around filing taxes as a nanny employer ensures you remain compliant with federal and state laws while protecting both your family and your caregiver.

Here is what you need to know for 2026.

1) Determine If You Owe Nanny Taxes

The first step in filing taxes is determining whether you meet the wage threshold.

If you paid your nanny $2,800 or more in cash wages during the 2025 calendar year, you are required to withhold and pay Social Security and Medicare taxes. This threshold increased from $2,700 in 2024.

Cash wages include salary, hourly pay, bonuses, and certain taxable benefits.

In addition, if you pay $1,000 or more in any calendar quarter, you may also owe federal unemployment taxes.

2) Understand Your Tax Obligations

When filing taxes as a nanny employer, you are responsible for several types of taxes:

a) Social Security and Medicare Taxes, also known as FICA

The combined FICA tax rate is 15.3 percent of your nanny’s gross wages. This is typically split evenly:

• 7.65 percent paid by the employer
• 7.65 percent withheld from the employee

Some families choose to cover the employee portion as an added benefit rather than withholding it from their nanny’s pay. If you do this, it should be clearly documented.

b) Federal Unemployment Tax Act, or FUTA

If you pay $1,000 or more in wages in any calendar quarter, you are responsible for FUTA taxes. The standard FUTA rate is 6 percent on the first $7,000 of wages paid annually. This is paid entirely by the employer and is not withheld from nanny wages.  

However, most employers qualify for a credit of up to 5.4 percent for paying state unemployment taxes, which reduces the effective FUTA rate to 0.6 percent.

c) State Taxes

State unemployment insurance rates and requirements vary by state. Some states also require state income tax withholding. Check with your state’s labor department or tax agency for current requirements. For California, check out this Household Employer’s Guide.

3) Register as a Household Employer

Before filing taxes as a nanny employer, you must obtain an Employer Identification Number, or EIN, from the IRS. This number is required for filing employment tax forms and issuing a W-2.

You can apply for an EIN directly on the IRS website at no cost.

Depending on your state, you may also need to register with your state’s labor or tax agency for unemployment insurance and other state-level requirements.

4) Verify Employment Eligibility

You are required to complete Form I-9, Employment Eligibility Verification, to confirm your nanny is legally authorized to work in the United States.

Both you and your nanny must complete the form. You are required to retain it for your records, but it is not submitted to the IRS unless requested.

This step is separate from filing taxes as a nanny employer, but it is part of lawful household employment.

5) Set Up a Payroll System

A reliable payroll system makes filing taxes as a nanny employer significantly easier.

Your system should include:

• Tracking hours worked
• Calculating gross wages
• Withholding the employee portion of FICA taxes if applicable
• Withholding any required state taxes
• Providing detailed pay stubs

Accurate record keeping throughout the year prevents errors at tax time. 

6) Make Required Tax Payments

When you hire a nanny, you owe federal employment taxes to the IRS. Most families pay these once a year when they file their personal tax return, using a form called Schedule H. Think of it as an add-on to your regular tax return that calculates what you owe as a household employer.

That said, if you’d rather spread out the payments instead of facing a big bill in April, you can make smaller payments to the IRS four times a year (called estimated quarterly payments). This is optional, but it can make tax time a lot less stressful.

Federal tax payments can be made through the Electronic Federal Tax Payment System.

State tax payments vary by state, so consult your state agency for deadlines and procedures.

7) Provide Year-End Tax Forms

By January 31 each year, you must:

• Provide your nanny with Form W-2, detailing annual wages and withholdings
• File Copy A of Form W-2, along with Form W-3, with the Social Security Administration

If it’s after January 31st and you haven’t given your nanny a W-2 yet, don’t panic—it happens! Get it to them as soon as possible, and keep this deadline in mind for next year. The IRS charges penalties that scale up the later you file, so add this to the top of your to-do list (and filing late is better than not filing at all!). 

You must also file Schedule H with your personal Form 1040 to report household employment taxes.

Timely and accurate filing is essential when filing taxes as a nanny employer.

8) Stay Informed About Annual Changes

Tax thresholds and rates are subject to change annually. For example, the household employee wage threshold increased to $2,800 for 2025 wages. Reviewing IRS Publication 926, Household Employer’s Tax Guide, annually can help you stay current.

9) Consider Professional Assistance

Filing taxes as a nanny employer can feel complex, especially if you are navigating it for the first time. Many families choose to work with a household payroll service or tax professional to ensure full compliance with federal and state regulations.

Professional guidance can reduce stress and minimize the risk of costly mistakes.

By understanding and properly filing taxes as a nanny employer, you provide legal employment to your caregiver and protect your family from penalties and back taxes. Doing it correctly from the start builds a professional and transparent working relationship.

Reminder: Westside Nannies is a referral agency, not a tax advisor. This information is not meant to stand in the place of advice from a legal or tax professional. For tax-specific questions, please consult a qualified tax professional.

Found this helpful? Check out our other articles to continue building confidence as a household employer and stay informed every step of the way.

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