Nanny Tax Forms and Procedures: What Are They All About?

Lots of families pay under the table. But is the risk worth the savings? Here's what you need to know.

nanny tax paper and calculator

There are few conversation topics that make parents more squeamish than nanny taxes. Case in point: We couldn't find any moms willing to go on the record about how they handle their nannies' income. The truth is, whether it's because taxes seem too confusing or expensive, there are a lot of families paying nannies "under the table," which is illegal.

But are the weekly savings and lack of paperwork worth the risk? "The IRS is very clear; if you have a household employee, you must withhold and pay employment taxes," says Stephanie Breedlove, VP of HomePay.

If you pay a caregiver more than $1,900 per year, you have to pay taxes. Not only is it illegal if you don't (more on that in a minute), but it may also do your nanny a huge disservice -- setting her up for a future without retirement benefits and leaving her to apply for a mortgage or a car loan without proof of income.

Your nanny is probably the only person who spends more time with your child than you do -- are you comfortable knowing that you're both skirting the law? "I've had clients tell me they pay taxes simply because in their profession, customers expect them to do things the right way. They're not considered trustworthy if they do the opposite in their personal lives" says Breedlove.

Here's what you need to know about paying taxes for your nanny: 

What Are the Benefits of Paying Taxes?
Taxes aren't all bad. Here are a few of the benefits of paying your nanny legally.

  • Financial security for your nanny -- now and in the future. Paying income tax will ensure that your nanny can build a work history, collect unemployment if you have to let her go and qualify for essential government benefits like worker's compensation, Medicare and Social Security payments later in life.
  • Peace of mind for you. You may think that if you're not running for office, you'll never get caught not paying taxes. But it happens more often than you'd think. "The most common way that people get in trouble for not paying these taxes is when your nanny tries to file for Medicare or Social Security at some point down the road," says Amy Torres, an attorney and nanny success coach. Adds Breedlove: "Or the nanny may have to file for unemployment benefits, at which point she'll have to list all the families she's worked for over the past several years."
  • You don't want to get caught. If you get audited, go through a messy divorce or your nanny reports her income to the IRS (see above), your under-the-table payments can come back to haunt you -- in an expensive way. "You'll have to pay all the taxes you should have remitted in the past, including the Social Security and Medicare taxes that should have been withheld from the employee's pay," warns Breedlove. You may also be subject to large fines -- the amount of which can vary substantially based on IRS analysis and the severity of the case. "These fines are going up as the government is paying closer attention to household employees," notes Torres. And if you're a lawyer, doctor, or in another profession that is licensed by the state, you may face professional penalties or even lose your license.

    Find out if you're on the list of the Top 11 Professions Most at Risk if Not Paying Nanny Taxes »

How Much Will I Have to Pay?
Check out our nanny tax calculator for a quick answer.

You'll likely need to withhold around 13 to 20 percent of your nanny's gross wages to cover federal and state taxes (between 1 and 5 percent), as well as Medicare and Social Security (employers are responsible for 7.65 percent, while employees currently pay 5.65 percent -- this might go back to 7.65 percent in 2012), depending on your nanny's income and your own income and tax bracket.

Here's an example: Say you pay your nanny $600 per week ($15 per hour, 40 hours per week), you'll need to withhold the following from her take-home pay:

  • Federal Income Tax: $75.77
  • Social Security: $25.20
  • Medicare: $8.70
  • State Income Tax (3.7%): $22.30 (note: we used New York State. Here's where you can find your state income tax rate.)

Total withholdings: $131.97

You'll also need to make the following contributions:

  • Federal Unemployment: $4.80
  • Social Security: $37.20
  • Medicare: $8.70
  • State Unemployment: $24.60 (note: we used New York State. Find yours by contacting your state unemployment tax agency)

Total Additional Payments: $75.30

This means your weekly bill comes to $675.30 per week, and your nanny will take home $468.30. Over the course of the year, you can expect to shell out $33,991.30 -- $2,791.30 more than if you paid a flat $600 per week under the table.

Consult the IRS' Household Employers Tax Guide for more details on each of these withholdings.

Doesn't that Mean I Pay More and My Nanny Gets Less?
Week-to-week, yes. Household employers can't tax deduct employees' wages the way businesses can, so you end up paying the majority of your nanny's salary with your own after-tax income. And she'll take a hit in her weekly paycheck when you start withholding the government's piece of the pie. So you may need to increase your nanny's salary so that her take-home pay doesn't take as much of a hit (again, use this Nanny Tax Calculator to run your own numbers).

The Good News:
But there are more benefits!

  • You can pay with some pre-tax dollars. Ask your employer if they offer a Dependent Care Account (DCA). This lets you set up to $5,000 of your annual income aside before taxes, and then use that money to pay your childcare bill. Reducing your overall taxable income will reduce your overall tax burden, which may help balance out the extra you're paying in nanny taxes, but can get maxed-out if your child is also in a preschool program.
  • You may qualify for the federal dependent and child care tax credit. This lets you claim around 20 percent of the first $3,000 you spend on child care per child. This tax credit, combined with your DCA, can save you about $1850 per year -- meaning you're only coughing up an extra $941 at the end of the day, to pay your nanny's taxes using the numbers above. (Note: If you have one child, you'll have to choose between this tax credit and a DCA.)
  • Your nanny earns more in the long-term. Think of that extra $75.30 per week as a deferred raise for your nanny -- because she'll be able to collect on it when she files for Medicare, Social Security or unemployment. "When nannies understand the benefits and financial protections that come from our payroll tax system, they're much more comfortable with the idea of being paid above board," notes Breedlove. This should provide some assurance to your nanny if she is nervous about how she'll manage with less take-home pay.

How Do I Set Up My Tax Payments?
The most efficient way to pay taxes on your household employees is to sign up with a payroll service like Home Pay. For a quarterly fee, they'll direct deposit your nanny's paychecks to her bank account, withhold all appropriate taxes and file them electronically. They also have easy and free nanny tax calculators you can play with to determine how much your nanny will take home at the end of the day.

The most important thing to keep in mind is that you can handle this process. It might seem like a lot, but once you get the hang out it, you'll be fine -- and legal!

Your Next Steps:

*The tax information contained in this article should not be used for any actual nanny relationship without the advice and guidance of a professional tax advisor who is familiar with all the relevant facts. The information contained herein is general in nature and is not intended as legal, tax or investment advice. Furthermore, the information contained herein may not be applicable to or suitable for your specific circumstances and may require consideration of other matters.

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Comments (202)
Photo of Stephanie B.
Stephanie B.
Hi Shelly!

In order to file your taxes, you should use a W-2 provided to you by the family you worked for. This is because you are an employee of the family, not a sole proprietorship business. You don't need to worry about a Schedule C because your work doesn't qualify to realize a profit or loss like a business does. The only pseudo-nanny jobs that may qualify are in-home daycares and the individuals that run them don't refer to themselves as nannies generally. What you need to do instead is talk to the family and make sure they understand by claiming these $4,800 as childcare expenses, they also need to file the appropriate employment tax returns in California and with the IRS. The responsibilities they have are detailed on our website (
Posted: April 15, 2014 at 4:08 PM
I was paid $4800 gross wages by the mother I worked for. She is claiming this for a tax credit. I now understand that she was supposed to be paying employment taxes all along, but didn't. I am no longer doing nanny work, but need to know how I can file my taxes properly for 2013. It seems that I could file a Schedule C-EZ with the IRS, but when I try to find an equivalent form to file with California, I can't find one. In retrospect would I have had to create a sole proprietorship, and paid quarterly taxes..and if so, what do I do now to straighten it out? Please help.
Posted: April 14, 2014 at 3:34 PM
Photo of Stephanie B.
Stephanie B.

Federal and state income taxes are actually the responsibility of the nanny to cover if they are not withheld from your pay. The household employment industry is unique in this regard because nearly every other job you can take automatically withholds them from an employee's pay. But as with FICA taxes, if the family wants to cover a nanny's income taxes, they can do so. They just remit the taxes that accrue each period and give the nanny credit on their state and federal employment tax returns. I would just double check that the family is in fact covering your income taxes because if that's not the case, you'll owe the entire sum when you file your personal income tax return. By withholding, you essentially pay the income taxes in small amounts all year long.
Posted: April 09, 2014 at 5:17 PM
Photo of Sonja T.
Sonja T.
Hi Stephanie,

thank you so much for your reply, that actually makes sense. What about Federal and State taxes that are being withheld, does that work the same way?
Thank you
Posted: April 09, 2014 at 11:03 AM
Photo of Stephanie B.
Stephanie B.
Hi Sonja!

Thank you for the kind words. Taxes can be a bit complicated sometimes and I'm always happy to try and clear things up. In your particular situation, it sounds like you've got a very generous family that really values your work if they're willing to cover both halves of Social Security & Medicare (FICA) taxes. You're actually not losing out on anything in this situation because the reason these taxes are normally withheld is because employees are unable to pay these taxes on their own. The tax system is therefore set up so that the family has to send the withheld portion of FICA along with their share of FICA to the IRS. When they do this, they list your identifying information along with your wages. The IRS then understands you've paid your taxes and at year-end, the same information is sent to the Social Security Administration so you built credit toward your retirement benefits.

I know that's a really long explanation of how things work behind the scenes, but the point I'm trying to make is that it doesn't matter whether FICA taxes are withheld from you or paid in full by the family. The family has to send them to the IRS either way. They're just letting you take home an additional 7.65% in pay.
Posted: April 08, 2014 at 3:57 PM
Photo of Sonja T.
Sonja T.
Hi, thanks for all the great nanny taxes information.
I do have a question as well. I just got a job offer that will pay a flat rate per week and the parents say they will pay all other expenses. So both parts of taxes, Social Security, FUTA, etc.
Now I am just wondering if I am not losing that tax money that they will pay on top of my salary, because if I were to pay my share I could claim it at the end of the year and would most likely get a refund?
I can't find information about that anywhere, so any help would be greatly appreciated.
Posted: April 08, 2014 at 10:42 AM
Photo of Stephanie B.
Stephanie B.
Hi Cody!

Just because an employer doesn't give you a W-2 does not exempt you from having to report your wages. All individuals must file taxes if they've received income and failure to do so is against the law. The reason you owe $700 in taxes through your nanny job is because the family didn't withhold any taxes from you. Most people that work as a nanny don't realize that federal and state income taxes are not required to be withheld - and if they aren't - it's the responsibility of the nanny to pay them. In almost every other profession, income taxes are required to be withheld which essentially means you're paying that $700 in small amounts throughout the year.

Moving forward, the family needs to start treating you as an employee, which means withholding the appropriate taxes and paying their share of employment taxes. By claiming your wages, I'm assuming they're trying to apply for a tax credit, which could pose problems if the IRS decides to look into the details of your employment with them. They'll find the family never paid employment taxes and could impose fines and penalties on the family for non-compliance.
Posted: April 07, 2014 at 11:47 AM
Cody B.
I am so confused of all this tax stuff. I had 2 jobs before my nanny job. I made around 8000 with my 2 jobs plus 4 months of my nanny job. I get 12.50 a hour. I did taxes and I owe 700 in taxes. I do not get taxes taken out but they claim me at tax season, they have my social number. My question is what exactly am I supposed to do. I'm a full time college student I really shouldn't have to be paying in should I: (

I also have a father in law who thinks he knows it all so I need to see if I'm right. He tells me since I don't get a w2 I don't have to claim the money I'm making. I tried to explain they have my social and try claim me. Can anyone try and explain this better? I'm 21 and in MN. Thanks!
Posted: April 05, 2014 at 9:19 AM
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Stephanie B.
Hi Natasha!

You're definitely in a potentially awkward position and I'm sorry to hear that. If the family is adamant about not paying over the table, you'll need to budget for the federal and (perhaps) state income taxes that you'll owe. Normally the family would withhold these from you, but if they're not paying legally, obviously they won't be doing that. Instead, you'll need to get yourself on an estimate tax schedule with the IRS and send them Form 1040-ES on a regular basis. Here's how the schedule works:

1040-ES #1 is due mid-April for taxes accrued in Jan, Feb and March
1040-ES #2 is due mid-June for taxes accrued in Apr and May
1040-ES #3 is due mid-September for taxes accrued in June, July and Aug
1040-ES #4 is due mid-January 2015 for taxes accrued in Sept, Oct, Nov and Dec

The reason you want to do this is because without the payment plan, you'll owe all the income taxes that should've been withheld in one large payment during tax time. And because you won't have a W-2 from the family, you may have to file a substitute form that could potentially cause the family to be audited. Hopefully none of this will occur and the family will pay you over the table, but this is what you can do to fulfill your tax obligations. I wish you the best of luck Natasha!
Posted: April 02, 2014 at 11:15 AM
Photo of Stephanie B.
Stephanie B.
Hi Valentina!

In your situation, the family's temporary residence has no bearing on their tax obligations. They still need to treat you like any other family in California would. The reason is that you still have tax filing requirements because you're earning wages in the US. Therefore the appropriate taxes need to be withheld and credited to you at year-end. If the family needs some help, send them here to see what California requires (
Posted: April 02, 2014 at 11:03 AM
Photo of Stephanie B.
Stephanie B.
Hi Heather!

IRS Publication 926 sets the tax rules for household employers. While there is an exemption for spouses and parents, there are no special rules for hiring your sister, so she would be treated like any other employee from a tax standpoint. That means you'd be withholding taxes from her, paying your share of employment taxes and filing the appropriate tax returns. Since I don't know what state you live in, I'd like to point you to our state-specific nanny tax pages and you can see the requirements that apply specifically to you. (
Posted: April 02, 2014 at 10:58 AM
Photo of Natasha S.
Natasha S.
Hi. So I'm trying to figure all this out but I'm a little confused what to do as a nanny. I am compensated at an hourly rate and I would like to pay taxes from this income but I don't see information on what I should do. The family for which I am a nanny has decided what they would like to do with my pay and I have no control on whether it's under or over the table. I do, however, want to make sure I'm doing the right thing. What do I do?

Posted: April 01, 2014 at 11:54 AM
Photo of Valentina Z.
Valentina Z.
Hi, I have a question. I just met an European family that will be coming to the Bay Area for a couple of months. Both parents work for companies that have offices in San Francisco and this is why they will be in the Bay. I am not sure under which visa they will be but I might be working for them. How does it work? I can legally work in the US but they are not resident. How can we file paperworks legally?
Posted: April 01, 2014 at 5:54 AM
My 28 year old sister is coming to live with me, she currently lives in another state with my father, and does not work. What kind of tax situation will I be in as far as childcare deductions & nanny tax issues if I pay her weekly to be at home with my son while I work overnights? Thanks so much for a reply.
Posted: March 31, 2014 at 7:16 PM
Photo of Stephanie B.
Stephanie B.
Hi Nicole,

You're very welcome. Household employment taxes can be complicated, so I'm happy to help whenever someone gets stuck. I completely understand the sensitive nature of your working arrangement, but quite honestly, if your employer is completely unwillingly to adhere to the law, the only way you'll be able to recover the wages that are owed to you is to file a Wage Dispute with the state. You're right that it will be your word against your employer's, but the state is VERY sensitive to worker rights and they're also very sensitive to making sure they collect the revenue that is owed to them. So if you're being short-changed on wages, that also means the state is being short-changed on tax revenue and they may be interested in investigating the matter.

It's important that your employer understands the ramifications of running your payroll through her company because not only can her personal tax situation end up in a mess, but her company's can be as well. If she's counting you as an employee of the company and taking a tax deduction on your payroll, that's not only illegal, but it messes up her company's tax returns too. I wish you the best of luck in resolving this situation Nicole!
Posted: March 26, 2014 at 10:33 AM
Photo of Nicole P.
Nicole P.
Hi Stephanie,

Thank you for your expedient reply, it is much appreciated! I read through the cite you recommended, and my employer is definitely not following the guidelines set by California state law.

My employer did not provide me with a California Wage Notice to sign (with clear hours, pay or responsiblities), therefore will it come down to her word against mine in regards to what we agreed upon for pay if I try to peruse overtime reimbursement? Also, she said that she is going to pay me through her company's payroll, and that I will receive my paycheck every other week. (Which I know now through the cite you recommended, is illegal.)

This is a delicate situation as I do not want to be fired/replaced, because I need the income. (She is a very successful business woman, and I believe she knows what she is trying to pull). Basically, I want to know if after 3-4 weeks into the job I can present my legal rights in regards to overtime, and then receive back pay? I am still unsure as to how she is going to "fudge" the numbers through her company, because it would definitely flag overtime if she imputed my hours accurately. (My first paycheck is supposed to come this Friday.)
Posted: March 25, 2014 at 4:12 PM
Photo of Stephanie B.
Stephanie B.
Hi Nicole!

You've got a lot going on with your employment situation, but I'm going to stick with explaining how your setup should be handled in accordance with the law. You should not be paid under the table for any of the hours you work and the family should not be actively avoiding overtime. It's against the law both on the state and federal level and California is especially stringent with their employment laws. If you work 55 hours per week, you should be paid for 40 hours at your normal hourly rate and 15 hours of overtime.

I recommend showing the family the following page about all the payroll, tax and labor law responsibilities they have as a California household employer. ( It will really help get them to understand the law and hopefully get both of you on the same page.
Posted: March 24, 2014 at 6:04 PM
Photo of Stephanie B.
Stephanie B.
Hi Jessica!

While I'm not an expert on work visas, generally speaking, a family that is here in the United States must still follow federal and state labor law guidelines if they hire an employee. That being said, as a live-out nanny, I would recommend they do pay you at least minimum wage for the first 40 hours of the workweek and overtime for the additional 30 hours. At a minimum, that should place your gross wages at $616.25 per week.
Posted: March 24, 2014 at 5:28 PM
Photo of Stephanie B.
Stephanie B.
Hi Sammie Jo!

I'm so sorry to hear you've been unable to get the family to do the right thing. You're absolutely right that the IRS would classify you as an employee and it was very smart of you to present IRS Publication 926 to the family. If the family is unwilling to treat you as an employee, the only way you can correctly file your taxes is to file an IRS Form 4852, which is a substitute form for a W-2. You'll have to fill out the appropriate boxes for the W-2 information and explain why you were unable to obtain one. This will satisfy your filing requirements and should give you a proper tax return that you can use to try and obtain the loan. Please be aware that filing a Form 4852 can cause the family to be audited because the IRS will want to know why no taxes were ever withheld from you. It may be wise to speak to the family one last time to alert them of this course of action. Sometimes it's enough to have the family reconsider misclassifying you as an independent contractor.
Posted: March 24, 2014 at 4:26 PM
Photo of Nicole P.
Nicole P.
Hi, I live in the state of California and need some guidance on how to handle overtime and taxes with my employer. I work 11-12 hour days (7am-6:30/7:30pm), over 55 hours per week.

I agreed to the first $600 dollars being under the table at $12/hr and no overtime pay.

After the first $600 is grossed I will be taxed at $15/hr with no overtime paid. I discussed this with my employer and she said that it was "a grey area with homecare work, and it would only be a problem if I reported her."

From reading previous posts, after 9 hours I am supposed to receive time and a half in the state of California. I don't know how to address this with my employer, and I do not know how she is reporting it as I have not received a paycheck yet. It is nonstop housecleaning and childcare with no scheduled breaks/lunches. How should I handle this? What forms, web links or information can I show her so she has to pay me overtime? Can I just report what I was suppose to earn after my job ends in 6 weeks? Please help!
Posted: March 23, 2014 at 8:04 PM
Photo of Jessica W.
Jessica W.
Hi, my name is Jessica. I have been working for an Hindu Indian family for almost a month now. The family now wants me to take up a fulltime position. That is Monday through Sunday a total of 70 hours for one week. A total of $350 for that week. That is only $5 an hour and is over 40 hours so that would be overtime right?. Minimum wage in Alabama is 7.25. Will they get in trouble with the IRS if they don't pay me at least minimum wage for that week? Plus the fact that I will have 30 hours of overtime. I only said yes because I currently work in fast food and I really want to get out of it. I love babysitting and being a nanny but I feel that I should be making more money is the job really worth it. They are also here under visas. So how does the tax thing work on them. It would be the same as any other citizen correct? I would appreciate the help.
Posted: March 21, 2014 at 7:35 PM
Sammie Jo
My employer keeps telling me that I am an independent contractor and need to get an EIN and provide her with some form at the end of the year. She is going off of her own experience when she was a licensed babysitter and watched children in her home while caring for her own children. I believe that I am her employee because I go to her home 2-3 days/week and watch her children while she is working. Everything that I use to care for them, she provides.

I have shown her IRS Publication 926; Household Employer's Tax Guide and she still does not believe that I am her employee and refuses to pay taxes. Is there anything that I can do to get this as a legal form of income with her refusing to pay her portion of taxes? I have been saving ~40% of my weekly wages since I started working for her in January. My main reason for wanting this done sooner rather than later (i.e. next tax season) is that I want to buy a better car (have mentioned this to her as well), but I cannot get a loan being paid in cash and I do not have enough saved up to pay for a car completely right now.
Posted: March 20, 2014 at 2:01 PM
Photo of Stephanie B.
Stephanie B.
Hi Jill!

Based on the information you provided, it's very likely the IRS would consider your neighbor to be your employee. The approximately $8,000 in wages you paid her would be subject to the household employer tax process. Since you let me know you're in Colorado, please take a look at the overview for the "nanny taxes" in your state so you can see what your requirements are. (
Posted: March 19, 2014 at 4:44 PM
I send my daughter to our neighbor's house while I'm at work. She is not licensed and does not run a daycare business - only watches my daughter. I'm not sure if I have to provide her with anything for her taxes, or whether the ~$8000 is subject to any taxes. We are in Colorado, and I saw you mentioned that in a previous response.
Posted: March 18, 2014 at 7:59 PM
Photo of Stephanie B.
Stephanie B.
Hi D. Soto!

The arrangement you have with your stepfather definitely qualifies as an employer/employee relationship, so you should not provide him with a 1099 or have him claim self-employed on his joint tax return. Because your stepfather is the person providing care for your child, the wages you pay him are exempt from FICA (Social Security & Medicare) and federal unemployment insurance taxes. And unless you live in Colorado, New York or Washington, you won't need to pay state unemployment insurance taxes on his wages either. But with all that said, you can still apply the wages you paid to him to the Child and Dependent Care Tax Credit (IRS Form 2441). In situations like yours, the IRS is simply giving you a break from the normal tax responsibilities of a household employer because it's a family member helping you out.
Posted: March 18, 2014 at 11:13 AM
Photo of Stephanie B.
Stephanie B.
Hi employee seeking info!

There are definitely more employers asking questions, but I'll be happy to answer any employee questions - including yours - that come up. When you talk about paying your own taxes, I'm not 100% sure how to advise you because I don't know if you've had income taxes withheld from your pay in 2013. If you did, you shouldn't have much to worry about when you file your taxes. You'll use the W-2 the family gave you and see if you get a tax refund or if you'll owe a little bit of money to the IRS. If the family did NOT withhold income taxes from you (and they're not required to by law), be prepared for a tax bill. The IRS requires you to pay federal and state (if your state has income taxes) income taxes and if they aren't withheld throughout the year, you'll owe the whole amount when you file your taxes. This is why I always recommend families withhold these taxes from their household employees. It's easier to have a little bit withheld each paycheck than budget for a large tax bill during tax time.
Posted: March 18, 2014 at 10:46 AM
D. Soto
I pay my stepfather to babysit my child (we live together in the same apartment) Last year I paid him $4560. I am confused as to whether I need to apply for an EIN and withhold taxes, or if I need to provide a 1099 and how I would go about doing so if need be. I have just had a new baby and will be paying him this year as well, albeit probably not as much since it will only be for 6 months or so. I do claim him as a provider under the Dependent Care Benefits, and when I prepare my mother's tax return (they file jointly) I list his income from self-employment. I am unsure as to what I am doing legally/vs illegally and how to fix it so that everyone benefits from the temporary arrangement.
Posted: March 16, 2014 at 3:23 PM
im finding more info on here for the employers but not the employees!! i am paid a salary, my employers have filed on their own based on the income i received this past year (2013), now i need to file based on my income. i have no idea where to even start. i have basically saved money from each paycheck each month as i know i now need to pay in. what do i do? please help!!
Posted: March 14, 2014 at 1:42 PM
Photo of Stephanie B.
Stephanie B.
Hi Brittany!

I'm so sorry to hear you're not being paid minimum wage. That is actually a federal and state requirement, so the family should really increase your hourly rate immediately. In terms of the tax filing and withholding requirements, they are independent of the amount of money you earn. If you make $1,900 or more, the family will have nanny tax responsibilities. I sincerely hope you can work out a better pay rate with the family Brittany. Good luck!
Posted: March 13, 2014 at 6:47 PM
Photo of Brittany H.
Brittany H.
How does this work if you are being paid less than minimum wage?

Thanks in advance
Posted: March 13, 2014 at 3:47 PM
Your nanny
"unfair employer" IS the unfair employer trying to get information about the conjured up scenario she posted here. Trying to benefit off your nanny and get out of paying your share of required employer taxes is disgusting. No one will believe you as you're pretending that you didn't know or you didn't receive such & such paperwork. If that's the case, how do you have my SS # again?? Oh yeah, that would be the tax forms I signed for you.
FYI as stated on the IRS website regarding form w-4: " If a new employee does not give you a completed Form W-4, withhold tax as if he or she is single, with no withholding allowances." - or in this case it "not being on file". Employers are required to withhold the maximum allowances as described.

"Consequently, the IRS views operating a business while owing payroll taxes as illegally borrowing money from the U.S. Treasury. IRS and state auditors can assess an employer not only the payroll taxes that should have been collected and paid, but also the reclassified employee's unpaid income taxes. And as the penalties and interest mount, businesses can receive audit bills of 50% or more of wages paid. For example, if you paid Millie Ways, an employee, $20,000 as an independent contractor, the IRS might hit you with $10,000 in taxes, penalties, and interest for the misclassification. Caution IRS collectors are extremely tough if you owe payroll taxes. Keep in mind that revenue officers can seize assets and force you out of business if you owe back payroll taxes."

Thanks again to Breedlove (my current payroll) and parents who LEGALLY pay their nannies.
Posted: March 12, 2014 at 3:26 AM
unfair employer
After doing more than everything for the family I worked for, using my own vehicle to drive kids around, doing constant errands, driving across country and relocating to be able to support them through out a change, as well as putting extra hours doing everything else that was constantly pressured and guilt tripped on me to do, I finally called it quits and let go of all that I was doing for them.
I received a 1099 which stated my salary for the year of being 13500.
Once I detested and brought up the irs publication 926 and demanded for a w-2 for being misclassified, I have now received a w-2, that
A. has increased my salary income, where the extra increase is what she is now claiming for the taxes being paid for social security and medicare.
B. I have nothing stated in the box for the federal taxes withheld.

My questions are as follows:

A. Could she add the FICA taxes withheld, without my consent and adding it now to my total gross income?
B. Why wouldn't I have any federal taxes withheld and would I need to contact her again for trying to avoid paying my portion just as she detested the 1099?
Posted: March 10, 2014 at 4:37 PM
Photo of Stephanie B.
Stephanie B.
Hi Jennifer!

You're not the only one confused about overtime in California. The Domestic Worker Bill of Rights added to the state overtime law this year and many people are still getting used to recognizing when overtime is mandatory and when it's not. Regarding your specific situation, you're right that there is a daily overtime requirement if you work more than 9 hours in a day. I say requirement because the family is not allowed to decide what portion of your wages are reported. The state and the IRS will recognize this very easily because you'll end up reporting a higher wage than the family will show when you both file tax returns next year.
Posted: February 21, 2014 at 12:24 PM
Jennifer S
Hi so I'm confused about overtime in California. My employers are paying me on the books for 9 hours a day but will pay me off the books for overtime. I feel they are doing me a huge disservice by doing this. Are they required to pay me overtime (anything over 9 hours a day) on the books?.
Posted: February 20, 2014 at 4:18 PM
Photo of Stephanie B.
Stephanie B.
Hi Mom of Three!

The IRS makes an exception for parents that provide childcare for their children. You don't need to report any of her wages to the IRS or provide her with a W-2. In fact, unless you live in Colorado, New York or Washington AND paid your mother $1,000 or more in a calendar quarter, you don't need to file state unemployment insurance tax returns either. To sum it up, it's highly unlikely you have to do anything at all from a tax standpoint. The IRS doesn't feel like burdening families that are watching out for each other.
Posted: February 18, 2014 at 12:38 PM
I am trying to figure out if I need to pay taxes on what I paid my mother. She lives at her own home, watches my children at my own home. Her total income from us for the entire year is 1720.00. How does this affect taxes and income? I did not file for an EIN and I didn't give her a w2 because we didn't plan on her watching them the entire year but that's just the way it worked out.
Posted: February 17, 2014 at 12:45 PM
Photo of Stephanie B.
Stephanie B.
Hi justwondering,

It's technically possible that your nanny could have an LLC. We sometimes see that with nannies that are in positions where they are caring for infants or the elderly. If this is the case, you wouldn't have to worry about taxes because you're paying a business for services.
Posted: February 14, 2014 at 10:28 AM
My nanny claims she is an LLC. So if she's an LLC (she has an EIN), am I still responsible for employer taxes, or do I just give her a 1099?
Posted: February 13, 2014 at 11:07 PM
Photo of Stephanie B.
Stephanie B.
Hi Jenice!

I'm glad you're bringing up the subject of paying taxes now instead of later in the year where the family will be behind on taxes and have a lot of work to do to catch up. In terms of how you'll file your taxes, the family should give you a W-2, not a 1099 because you're an employee rather than an independent contractor.

To get the family to pay you on the books, consider the steps in this article ( It's a good template for the discussion you should have. You can also show the family the specific requirements they'll have in their state so they know exactly what they need to do to make everything legal (

With those 2 items covered, you've done all you can to make it as easy as possible for the family to handle payroll and taxes on their own. If they don't want to deal with the work, mention that they can hire HomePay to take care of everything for them. Good luck with the tax talk and I hope everything works out for you!
Posted: February 11, 2014 at 12:03 PM
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Stephanie B.
Hi Steph!

Your tax responsibility depends on who has control of the relationship. You're still the family's employee if they determine what days of the week you watch their child, how many hours you'll work each day, if they bring food and toys over to your home for the child, etc. If the opposite is true, you may be considered an independent contractor and can receive a 1099. Without these details, I can't 100% tell you where you fall, but take a look at this IRS article and hopefully you'll be able to see how you should be classified. (
Posted: February 11, 2014 at 11:35 AM
Photo of Stephanie B.
Stephanie B.
Hi Angie!

A nanny is always your employee regardless of how much you pay her. The wage thresholds are strictly for tax reporting purposes. With that said, you are correct that your friend will just report the amount you paid her as "Other Income" when she files her taxes. You don't need to give her a W-2.

You are also correct that for the quarter she made more than $1,000 you need to file a state unemployment insurance tax return. This also means you will need to file a Schedule H with your 2013 income tax return because you need to report the unemployment insurance taxes you paid.

By the way, the $1,000 threshold applies for the TOTAL wages you pay any number of employees. So if your friend works for you AND another nanny fills in from time to time, your responsibilities kick in when all the wages you pay hit $1,000.
Posted: February 11, 2014 at 11:33 AM
Photo of Stephanie B.
Stephanie B.
Hi Megan!

Since you paid so little to your nanny (under $1,800), the IRS doesn't require you to file any forms or even issue a W-2 to her. In fact, unless you live in New York or Washington DC AND paid $500 or more to the nanny during a calendar quarter, you don't need to file state unemployment insurance tax forms either. Just FYI, if you hire a nanny in 2014 and pay $1,900 or more to her, you'll need to go through the nanny tax process.
Posted: February 11, 2014 at 11:23 AM
I was recently hired as a nanny but it is the first nanny job I've had where I will earn enough to need to pay taxes on it. I brought it up with my employers but they were very reluctant to talk to me about it. I feel like it is important to so though, but I don't know how? I've heard anything from an I-9, to a 1099, to a. W-2 ...what do I do? What forms are my employers supposed to provide for me or do I need to get them myself. Please help.
Posted: February 10, 2014 at 2:02 PM
I was a babysitter in my own home this summer for a child. I earned just over $1,000. From what I can gather, since I am not a household employee and rather an independent contractor, I should have received a 1099 from my former child's parents. Is this correct? I don't want to bother them if I am off-base here. Thanks!
Posted: February 08, 2014 at 5:47 PM
Need more clarification. I paid my friend for watching my son at her house with her own 2 kids for a short period of time (less than $1900/year). Does she count as a household employee? Or would she count this as extra income on her own taxes, and I don't need to report anything? Would I pay unemployment insurance on her for the quarter that she made >$1000?
This is different than my current nanny who is watching my son at my own house, right?
Posted: February 08, 2014 at 5:45 PM
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Lila T.
Hi is the limit $600 or $1800?
Posted: February 08, 2014 at 8:41 AM
Megan R.
I had a nanny work for me and she was paid $700 in cash for 2013 (she didn't work out) What forms do I have to fill out and what is my other responsibilities?
Posted: February 07, 2014 at 4:15 PM
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Stephanie B.
Hi Lynn!

As a nanny, the IRS says you're supposed to file your taxes using a W-2 provided by the family, not a 1099. You're actually paying more in taxes by filing this form. If the family is ever audited, they will owe back taxes plus penalties and interest for failing to pay their employer taxes to the IRS and the state.

It's very important that the family set themselves up as an employer with the IRS and the state, account for the taxes that should have been withheld from you, pay their share of employer taxes and continue this process moving forward. Share with the family this resource ( so they know what responsibilities they have in their state and please let them know that HomePay can get their tax situation and your payroll straightened out moving forward.
Posted: February 06, 2014 at 5:34 PM
Photo of Stephanie B.
Stephanie B.
Hi Dawn!

The $1,800 threshold is very important for you to figure out because if you're under it, you won't have to worry about the tax withholdings. You'll just report the wages as "Other Income" when you file you personal income tax return.

If you did go over the $1,800 threshold, the family will need to account for the taxes that were never withheld from you, file late tax returns and issue you a W-2. Just a heads up, the family will need your SSN to file these returns, but you have nothing to worry about in providing it to them.
Posted: February 06, 2014 at 5:25 PM
I work as a Nanny and the parents file a 1099 Form every year (3) which I file with my Taxes but I'm just learning that doesn't file or pay my SS Taxes. Is that correct and if so I do I correct this? I will be 62 soon and planning on drawing my SS Benefits.
Posted: February 06, 2014 at 12:50 PM
I was a babysitter for a girl in town last year. I was paid at most $125 a week. Not a fair amount, I know. I only babysat for about 4 months. We never discussed taxes because I honestly didnt know I had to worry about them. Will I need to do anything about the income earned? I dont know if I was over the $1800 limit or not. I will have to see if my bank keeps arrecord of checks cashed through my account or not. Anyway, im trying not to freak out, but everything to do with taxes scares me lol. Will she need anything from me to file her taxes? I'm not comfortable giving out my ssn if thats anything she needs. Thanks for the help!
Posted: February 05, 2014 at 7:31 PM
Photo of Stephanie B.
Stephanie B.
Hi Angie!

Regarding the W-2, please make sure to give the form to your sister ASAP. The IRS can technically fine you for getting it to her late. As far as your unemployment insurance taxes go, you do need to file these returns retroactively as you will have to account for unemployment taxes on your Schedule H. All you need to do is locate the form for your state and fill it out indicating the quarter you are paying for. Please be aware the state will send you a notice indicating late penalties and interest will be due, but it's better to do this now than wait any longer. Good luck Angie!
Posted: February 05, 2014 at 10:43 AM
Hi! So much useful information! I hired my sister as a nanny last year and did not know any of this. I applied for my employer IDs to correctly pay her. Is there something special I am supposed to do since I am getting her W-2 to her late? What about unemployment taxes? I did not pay them quarterly.
I also hired a different friend for a short period of time. She did not make the $1900 minimum for household employee taxes but she did hit the $1000/quarter required for federal unemployment taxes during one quarter Jul-Sep 2013. Do I have to pay for that one quarter? How do I do this retroactively? Thanks!
Posted: February 05, 2014 at 1:18 AM
Photo of Stephanie B.
Stephanie B.
Hi Kristen!

This is Stephanie Breedlove with HomePay and I'll be happy to help you out. Since the family only paid you $400 last year, they're not obligated to withhold any taxes from you or issue you a W-2 to do your taxes. You are correct that you would file these earnings as Other Income. Most websites will prompt you with a "Did You Receive Other Income?" question and this is where you will input the $400. If you file a paper tax return, you'll write the amount on Line 21 and use the code "HSH" for household employment.

In terms of your pay, this is something you need to address with the family going forward. I'm not sure how many hours you work each week, but the federal minimum wage is $7.25/hour and at $75 per week, you can only work about 10 hours per week to stay above this requirement. Also, even at $75 per week, the family will cross the $1,900 threshold to start withholding and paying taxes after 26 weeks. They need to be planning for this right now. Please have them read the following article to see what their responsibilities will be (
Posted: February 03, 2014 at 12:08 PM
Kristen P.
I'm working for a family, and get paid $75 per week. They have already claimed that they paid me $400 for last year. I don't know how to file this because they never take out taxes, and I am grossly underpaid for a more than full time job. I don't want to get them into trouble either, because I know they don't have much. I just don't know how to file this as " other income". Any suggestions?
Posted: February 01, 2014 at 8:35 PM
Stephanie Breedlove
Hi nannytroubles!

The family is probably just realizing they had tax responsibilities as a household employer and are trying to catch up before they miss tax deadlines. It's perfectly fine to do this because the other option is to essentially break the law and not report your income or their taxes at all. The reason you'll need to set aside money is because, while the family can cover the Social Security & Medicare taxes that they should have withheld from you and paid as an employer, they are not obligated to withhold federal or state income taxes from you. That means when you file your tax return, you'll owe the IRS the income taxes that were never paid last year.

I'm very sorry you're learning about the tax side of things now, but going forward, I would highly suggest having a written contract with the family that outlines not only the duties you'll be performing, but also the hours you work, your hourly rate and overtime rate and an agreement that taxes will be withheld and paid. If you would like to see what a good sample contract looks like visit (
Posted: January 27, 2014 at 4:03 PM
Stephanie Breedlove
Hi Nicole!

Your tax deduction should be based on your nanny's gross wages because that is the true amount you are paying for childcare-related expenses.
Posted: January 27, 2014 at 3:54 PM
I was employed for about 3 months with a family, being paid 350 a week for around 52 hours a week, they did not withhold pay from me to cover taxes, and now are trying to file taxes on me.
I guess my question is, can they even do this? I was being paid under minimum wage and they didn't withhold anything for me. I had no idea that I would need to set aside money in order to cover this, and I am being screwed over, yet again.
Posted: January 26, 2014 at 2:42 PM
I hired a nanny last year (Q4) and witheld her taxes and plan on paying them as part of my taxes and through schedule H. For the deduction I can take, should I include the gross amount she earns before taxes, the net amount after I withld her taxes, or the gross plus the employer % I will pay.
Posted: January 26, 2014 at 2:38 PM
Stephanie Breedlove
Hi Jessica!

I'm glad you understand now that a 1099 shouldn't be used for a nanny. It's definitely the most common tax mistake I see families and nannies make. The family can absolutely provide you a W-2 for your 2013 tax return, but they'll need to go back and account for their employer taxes and your tax withholdings for 2013 first. You can show them this article ( which has steps they can take to do this correctly.
Posted: January 23, 2014 at 12:03 PM
Photo of Jessica B.
Jessica B.
Thank you for your advice!
On 2012,I file my income tax return using the 1099 form without knowing this form is for independent contractor. Can my boss(pays cash) provide me the W2 form to file my income tax return 2013.
Posted: January 22, 2014 at 11:37 AM
Stephanie Breedlove
Hi Tanya!

You have two options in order to correctly file your taxes if you were paid under the table last year. Please be aware that both of these options will require you to account for a portion of the taxes that were never withheld from your pay.

1) Talk to the family and see if they will go back and account for the taxes that should have been withheld last year. They'll have to do some work to get caught up, but it's the right thing to do for both them and you. Once they establish their tax IDs, account for their taxes and your taxes, and file the prior quarter state tax returns, they can give you a W-2 to file your personal income tax return.

2) If the family is unwilling to put you on the books, your only recourse is to file a Form 4852 with the IRS, which is a substitute for a W-2. It will ask you for the wages you earned, the taxes withheld and your employer's information. When you file this form, the IRS will most likely audit the family because they will want to know why no taxes were ever withheld. This is a less-than-ideal solution, but it's the only way to legally account for your income if the family won't put you on the books.

Moving forward, I would highly recommend having taxes withheld from your pay so you don't run into this situation ever again. The sooner this gets taken care of, the less work it will be for both you and the family. I wish you the best of luck getting everything straightened out!
Posted: January 20, 2014 at 11:00 AM
Photo of Tanya S.
Tanya S.
I was wondering what is the best way to go about filing money that i made as a nanny. We didnt set up anything in the beginning with taxes taken out
Posted: January 18, 2014 at 5:43 PM
Stephanie Breedlove
Hi Mel!

You bring up a fantastic question that many families tend to have. The answer is no, you will not pay any additional money beyond what you've already paid with your regular state unemployment insurance returns. When your nanny files for unemployment benefits, she is paid through a state-funded pool that you've simply contributed to. Think of it like the way car insurance works; you pay your premiums so if you have an accident, you don't have to pay the total repair bill. Unemployment works the same way. You as the employer make a small regular payment and when your nanny needs the benefits, you don't pay it - the state does.
Posted: January 15, 2014 at 11:55 AM
I had a question about unemployement benefits. I currently employ a fulltime nanny (my only employee)and withold medicare, SS and personal income tax as the law requires. I provide her with a W2 yearly and she files her taxes. I also file a state wage and earnings report each year and pay the unemployment insurance required by the state. When my children enter school and I no longer require the services of a nanny my nanny will be eligible to collect unemployement insurance. Will I be required to pay any additional money beyone the yearly amount I currently pay at the time she makes a claim?
Posted: January 14, 2014 at 12:51 PM
Stephanie Breedlove
Hi Miranda!

Because you paid so little wages to the 2 short-term nannies, it's probably easier for you to just reimburse them for the income taxes you withheld and only issue a W-2 to the employee that earned more than $1,800 last year.
Posted: January 07, 2014 at 10:43 AM
Miranda J.
We had two nannies quit before we found a third one who stayed. We withheld social security and income taxes from all three, but only the third earned above the $1800 threshold. We already refunded the social security taxes to the first two employees. Can we also offer to refund the federal and state taxes withheld so there is no need to issue them W-2s?
Posted: January 06, 2014 at 6:11 PM
Stephanie Breedlove
Hi Christy!

You only need to provide a W-2 to employees that crossed the $1,800 (2013) FICA threshold. By the way, this year, the threshold goes up to $1,900. The $1,000 threshold you mention is more for you as the employer. If the TOTAL wages you paid to your household employees was $1,000 or more during the last quarter, you will need to file a state unemployment insurance tax return. It doesn't sound like this is the case in your situation, but just keep it in mind going forward.
Posted: January 06, 2014 at 11:23 AM
Photo of Christy N.
Christy N.
We have employed two nannies this year, both part-time. One earned over the threshold for both social security and medicare tax and federal unemployment and we will be giving her a W-2. The other only worked during the last quarter of the year and earned less than $1000. Do we need to file a W-2 for her as well because we paid another employee over the threshold or is it person by person? Thanks!
Posted: January 04, 2014 at 9:57 PM
Stephanie Breedlove
Hi Jackie!

Since the family has withheld taxes all year, the W-2 will be very simple for them to generate. You just need to remind them that you are unable to file your personal income tax return without one. They have until January 31, 2014 to send you a W-2, so by no means are you rushing them.
Posted: December 18, 2013 at 12:44 PM
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Jackie W.
Can anyone inform me on what needs to happen if the nanny is being withheld taxes but never filed a W2 form? The family I nanny for takes out taxes on my pay checks, but they have never asked for my social security number or any other personal information? What am I meant to do in that situation?

Any advice would be greatly appreciated!
Posted: December 17, 2013 at 3:27 PM
Stephanie Breedlove
Hi Candice! No, the IRS' rules outlined in Publication 926 are very clear that a nanny or babysitter than earns $1,800 or more in a calendar year ($1,900 in 2014) must have Social Security & Medicare (FICA) taxes withheld from their paycheck. The only taxes they are allowed to pay on their own (if they wish) are federal and state income taxes.

Some people use the phrase "file their own taxes" to mean they file a Form 1099 as an independent contractor, but this is considered worker misclassification and is seen as tax evasion according to the IRS. The family can get into tax trouble by doing this and the nanny actually pays more in taxes by filing a 1099. Instead, the nanny or babysitter should be given a W-2 to file her personal income tax return because she is an employee of the family she works for.
Posted: December 09, 2013 at 12:21 PM
Photo of Candice E.
Candice E.
Can the nanny or babysitter just file their own taxes instead of taking it off their pay check? how does it work?
Posted: December 07, 2013 at 11:23 AM
Stephanie Breedlove
I'm sorry to hear you are not being paid minimum wage. That's a discussion you should have with the family when you discuss taxes with them. It's extremely important to be proactive when speaking about having taxes withheld. The longer you put off this conversation, the harder it is for the family to go back and correct the errors that have been made. HomePay has a wonderful advice page you should reference when speaking to the family because it cover the basic requirements the family must meet in order to be compliant with the law. ( Good luck and please let the family know they can call us if they have questions.
Posted: December 02, 2013 at 4:51 PM
Photo of Sarah D.
Sarah D.
I wasbjust recently hired by a family. I will be watching thier 2 children for 9 hours and will be making 300 dollars a week. That is less then minimum wage. When I asked about taxes he siad he would be claiming it on his taxes. So what do i do now? I am already making less then minimum wage and he isnt taking taxes out of my paycheck every week. How do I protect myself, still earn enough to support my family and continue to work for this family ( I love the family).
Posted: November 30, 2013 at 10:40 AM
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Abigail A.

Keep looking for a different job-- when we had only 1 child we ADORED having a nanny who brought her son with her. We felt like it was a bonus that our first child got to have the "sibling" experience that often is lacking for an "only" child. Also, a mom's intuition is hard to beat so someone with real mom experience can be a bonus. I know it makes it trickier to find a good job-- but you will -- don't undersell yourself because you have a kid --it's reasonable to discount a bit but honestly you are bringing something unique to the table as well and the right family will recognize that. Shame on your current employer.
Posted: September 13, 2013 at 12:55 PM
Stephanie Breedlove
Hi Susana!

The tax laws for withholding Social Security and taxes generally do not apply to someone who hires their parent to care for their child. Your daughter also does not need to worry about federal unemployment insurance taxes. But if you live in Colorado, New York or Washington, she may need to pay state unemployment insurance taxes if you feel you will need them if/when you stop working for her.

When you file your personal income tax return, you will be subject to pay federal and state income taxes on the wages you did earn. However, because you are not making that much money, your tax liability shouldn't be that high (you'll probably owe around $300 - $400). If you don't want to owe any money at tax time, you can simply make estimated payments to the IRS four times per year to cover this cost. If you have any other questions, you can look at the requirement in IRS Publication 926 or feel free to call our office at 888-273-3356 and we'll be happy to assist you or your daughter.
Posted: August 30, 2013 at 12:26 PM
Hello, thanks in advance for the information you can provide, I'll start working as a nanny for my daughter, will be earning $250 a week.
I would like to know and get your advice, should I get the cash with no retention for taxes or is it more convenient for me that my daughter withholds what is legal, would it help her and me in some way? since it's such a small amount, I really appreciate the information and recommendation you can provide. Thank you
Posted: August 30, 2013 at 2:00 AM
Stephanie Breedlove
Hi Grace!

Because you earned more than $1,800 last year, the family should have withheld taxes from you, paid certain employer taxes and you should have filed your personal income taxes using a W-2 provided by the family. Since none of these items seem to have happened, the following needs to be done as soon as possible:

1) The family needs to file late state and federal tax returns for the 4th quarter of 2012. They will need to declare the wages they paid you as well as pay state unemployment insurance taxes and Social Security & Medicare (FICA) taxes. Because this will be a prior quarter, the family will be assessed penalties and interest from the state tax agencies and the IRS.

2) Once the family has these returns filed, they need to provide you a W-2 so you can file your 2012 personal income tax return. When you file your W-2, you will most likely be assessed a late fee by the IRS. The family will also need to file Form W-2 Copy A and Form W-3 with the Social Security Administration and file a Schedule H with an amended version of their 2012 personal income tax return.

3) The family will have to file late state and federal tax returns for the 1st and 2nd quarters of 2013.

When all these processes are complete, you and the family will be caught up for this year. Since your job with the family will end in September, the family will still need to file 3rd quarter federal and state tax returns. And by the end of January 2014, they will need to provide you a W-2 so you can file your 2013 personal income tax return.

I know this probably looks like a lot of work, but it is the only way to legally have your wages declared and keep the family compliant with the tax code. If the family would like help with these processes, we're happy to help. We routinely file prior-quarter tax returns for families that need to catch up on their federal and state tax requirements.
Posted: August 26, 2013 at 12:23 PM
Grace A. a first timer nanny and I started last year october 2012 and end january 2013 and I came back with the same family march 2013 and ill end up next month september 2013...I did not know til now I read all the post in here..when should I file for the taxes? my employer did not say anything about this. I was paid like 1500$ a! Thank you
Posted: August 25, 2013 at 7:39 AM
Photo of Cheryl C.
Cheryl C.
A lot of parents that hire in-home help don't realize it but it is not even legal for them to classify you as a 1099. The government says that you are not a contract worker, so this is out as well.
Posted: July 22, 2013 at 2:29 PM
I nannied for 7 months for a family I was very close to, even before I accepted the position. We agreed on 500/wk at 10 hrs/day (630-430 the latest). I figured I would file taxes as an independent contractor and they confirmed that when they met with their accountant when I started. They then decided to pay me 650/wk so I would have 150 for taxes, since I would have to pay them at the end of the year.

We never had a contract (as close as we were, I regret it. Please write out a contract!) AND
After 7 months I realized I was supposed to be treated as an employee. I printed out paperwork from the IRS and sites such as (all of which made it clear nannies are by law household employees) and brought it to their attention. They talked to their accountant and insisted that they were still doing it right. I felt very uncomfortable about it and learned I owe a lot more than I had expected to the IRS. I wanted to finally do it right and set up as an employee but they told me they couldn't afford to do that, as they would have to pay into my SS/Medicare and pay employment taxes. WELL, I COULDNT AFFORD THE $5000 I owed because of THEIR mistake. I should have looked into this before I took the position, but I didn't know. I figured since they had met with their accountant everything was ok.

As much as I love the family, we decided to part ways because we were not on the same page and I wasn't comfortable being treated as an independent contractor any longer.

I also regret not writing a contract because I worked passed 4:30pm ALMOST EVERY DAY!! 50 hrs/wk plus commute time is a lot for ANY person to work! It started coming out to about 50-55 hours a week! Also, they agreed to pay me 2 weeks of vacation time which I hadn't used yet and was saving for my upcoming wedding. In the meantime, they planned a week vacation and said I would be off that week. They didn't pay me for the week they were gone!!! I was upset about that because I was short by $650 one month. I didn't ask to be off and I don't think that is fair.

Please take caution and write a contract, meet with or talk to a tax person or IRS to make sure you are set up the legal way as an employee.
Posted: July 18, 2013 at 9:19 PM
Stephanie Breedlove
Hi Chelsea! I'm very sorry to hear your employment situation is not going the way it should. You are right that the family needs to be paying you at least minimum wage for the first 40 hours you work during the week and overtime for any additional hours. If they are paying employment taxes, they can technically file Form 2441 (Tax Credit for Child or Dependent Care) because the form only asks for the total wages they paid you. If you have paystubs from the family or have kept accurate records of the hours you have worked, you can file a wage complaint with your state's department of labor to try and recoup those funds. I wish you the best of luck moving forward and I hope you find another job soon that will be in line with your standards.
Posted: July 15, 2013 at 10:27 AM
Photo of Chelsea V.
Chelsea V.
The family I work for is paying me $5/hr obviously less then minimum wage. I am desperately looking for a different job but no one will take me (despite my education and experience) because I have to bring my son with me. Now my current employers want to claim child care on their taxes. Can they do this when they aren't paying me minimun wage?
Posted: July 14, 2013 at 5:39 PM
Stephanie Breedlove
Kelly: This is one of the main reasons why I advocate so strongly for legal pay. Many people see taxes as a burden, but they provide valuable benefits like a traceable employment history which is paramount for obtaining a loan. In order to provide the tax information you need, you will have to file amended personal tax returns for the past 2 years and include Form 4852 (substitute for the W-2) for both years to declare your wages. Be prepared for a large tax bill because the IRS will want to collect the Social Security, Medicare and federal income taxes you never paid. I would suggest asking the IRS to put you on a payment plan so you don't have to pay all these taxes back at once.

Your previous employer may also be audited once you file these tax forms because the government will want to know why your employer did not withhold taxes from your pay. Again, this is the law and the IRS will want to collect Social Security, Medicare and federal unemployment taxes from the family.

Going forward, you will need to have the family you currently work for begin withholding Social Security, Medicare and federal (and most likely state) income taxes from your pay. It should be easy for you to approach them with this subject if you explain the issues you're having with getting this mortgage loan right now. Additionally, when you're paid legally, you're eligible for unemployment benefits if you get let go from your job and you create credit toward your eventual retirement. I wish you the best of luck going forward!
Posted: June 25, 2013 at 11:10 AM
Photo of Kelly K.
Kelly K.
I have been a live-in nanny for the last two years, and I am transitioning to a new live-out job. Both jobs have been off the books. I am looking in to mortgage counseling to prepare to buy a house, and I need to provide tax information for at least the last two years. How do I deal with filing for the last two years of being paid under the table? How much can I expect to pay having been paid $700 per week? I only started my new job a week ago and agreed to be off the books again, so how do I broach the subject of going on-book with my employers?
Posted: June 23, 2013 at 11:18 AM
Photo of Kathleen C.
Kathleen C.
I have a home daycare, recognized by the IRS as a self employed independent contractor for over 10 yr. I have multiple families contracted with me. I do not have employees so am not required to have an EIN. At the end of the year, with all the deductions for a home business, I seldom have paid taxes. I have never felt like I needed to cheat the govt to support myself. I took a class through social services when I started to find out what the laws required. My state does not require licensure but some states do. It is all legal as other self employed small businesses. I give my parents an account of what they have paid at the end of the year so they can claim it against their taxes or pre tax child care payroll deduction. My first year, I reported quarterly and paid self-employment taxes as recommended and got a huge refund that exceeded what I had paid in and since then have not reported quarterly. You really have to research the end result; if you are going to make more than you are spending on equipment/ food/ toys/ and % of home expenses allowed for office expense then you might want to file quarterly income reports. I am retired and don't need huge income to supplement what I have, just enough to cover extra utilities and specific expenses for children so can control what I earn. IRS has lots of info on deductions and how to have home based business legally, you just have to ask for it.
Posted: June 12, 2013 at 10:21 AM
Stephanie Breedlove
Hi Nika! You certainly have a unique situation going on. I've never encountered an employment arrangement like this. I appreciate that you looked at Publication 926 and you are correct that you can choose to pay all your FICA and federal unemployment taxes in April. However, I would be cautious in proceeding this way because you may be subject to underpayment penalties from the IRS if your total tax remittance for the year is not at least 90% of what you owe (or 110% of what you paid last year). I recommend clients make estimated payments to the IRS throughout the year to eliminate this risk.

From a tax reporting standpoint, you will have to show this employee's wages to the state every quarter when you file state employment tax returns. The forms will ask for her Social Security number and gross wages, so there's no way around reporting her income. I'm not sure how or why your tax reporting is getting entangled with her previous employment arrangement, but I don't see how you can fulfill your nanny tax obligations while "hiding" these wages. If it were me, I'd follow the law and tell her that her previous arrangement is between her and her former employer.

Finally, I'd like to remind you to not pay your nanny through your husband's new business. I'm not sure if that was why you mentioned it in your question, but that's a fairly common mistake among business owners. (It's illegal because the nanny is a household employee and doesn't contribute toward the success of the business). I hope I answered all your questions and good luck to you moving forward!
Posted: June 11, 2013 at 12:15 PM
Nika S.
My husband and I are actively interviewing nannies. Our job posting made it perfectly clear that we wish to withhold all appropriate taxes for our new household employee.
Our dilemma: the top candidate, upon interviewing, noted that she is on one year's leave of absence from her current position, and that although she would like us to do withholding from her monthly (her preference) check, she would like us to wait to pay those taxes until April, which is evidently the time by which she needs to let her employer know whether she is returning. As a condition of her leave, evidently, she cannot be employed in a capacity where she might be earning enough to generate taxable income. Does this sound like a feasible option for an employer to withhold throughout the year, and then pay all at once, at the employee's behest? It sounds fishy to us, but on cursory review of IRS pub. 926, it looks like we'd be able to pay it all in April, when we would normally file taxes. But, to add an interesting twist, my husband has begun a new business, and will be paying quarterly taxes with his business... Help!
Posted: June 10, 2013 at 10:22 PM
Stephanie Breedlove
Hi Sarah! There are a couple of scenarios as to why the family may be asking you these questions:

1) They may incorrectly think you are an independent contractor. Families can deduct childcare expenses on things like daycare, so if a true independent contractor is running an in-home daycare, the family would need that person's Social Security number to claim a childcare tax credit. An independent contractor is also responsible for paying all employment taxes, so that may be why they are asking you to sign paperwork acknowledging this. However, nannies are classified as household employees, so the family is actually responsible for managing your payroll and taxes.

2) The family may be asking you to cover your own federal (and most likely state) income taxes, which technically you are responsible for. Most families will withhold these taxes from you every pay period, but they are only required by law to withhold Social Security and Medicare (FICA) taxes from your pay. By having income taxes withheld, you are making several small payments throughout the year to cover your tax liability and you don't even notice it. But if you don't have these taxes withheld, you will have to pay the entire tax sum at the end of the year when you file your personal income tax return and that can be expensive.

Either way, I would recommend talking to the family to make sure they understand you are an employee and that all the appropriate taxes are being withheld. If you or the family need additional help, please visit the Answers section at We have a compliance checklist for the family as well as answers to a lot of the questions that tend to confuse people about payroll and taxes.
Posted: June 03, 2013 at 12:59 PM
Photo of Sarah H.
Sarah H.
I just got hired as a nanny for twin 4 month olds. The parent said she would not be doing taxes, but will take my social security number so she can claim childcare. The parent also said I will have to sign a paper saying I'm aware that she is not taking taxes, and that I am responsible for paying them. I am confused. How do I go about with this? Please help.
Posted: June 01, 2013 at 6:00 PM
Stephanie Breedlove
Hi Damon! Since you are the legal guardian of your child and it sounds like the care for your child is always performed at your home, you are considered the employer and only your decision to pay over the table matters. Therefore, the money your ex-husband pays is simply a reimbursement for your nanny's wages. The same is true for the expenses for childcare camp. They are reimbursements and are also considered qualified expenses if you wish to write them off.
Posted: May 31, 2013 at 11:36 AM
Photo of Damon M.
Damon M.
What if you are splitting childcare with your ex-husband and he refuses to pay it over the table? If he is court ordered to pay 90% and I am ordered to pay 10% how can I legally pay my share?
He also wants to give me the 90% for childcare camp and have me pay it so I can write that off? (I have my son as the tax dependent)
Is that illegal, the court order says he is supposed to pay 90% but it doesn't say he has to pay it directly.

Thank you!
Posted: May 31, 2013 at 9:24 AM
Stephanie Breedlove
Hi Gini! has a nanny rate tool you can use ( to figure out how much a nanny is being paid in a certain area of the country.

As far as your question goes, at $250 per week, you will certainly cross the $1,800 threshold to have taxes withheld this year. The family will be required to withhold Social Security and Medicare taxes and I would also recommend federal and state income taxes be withheld as well so you don't have to pay those all at once at the end of the year. By having taxes withheld throughout the year, you are "paying" taxes by having them deducted from your gross pay each pay period. When the family pays their employment taxes to the IRS and state agencies, they are also giving these organizations the amount of money they withheld from your pay on your behalf.
Posted: May 29, 2013 at 11:18 AM
Hi Stephanie, I have been a part-time nanny of 4 for the past 8mos. I didn't file taxes this year because I didn't make enough to be required to. I know I will have to file for 2013 tax. The family I work for doesn't pay my taxes but they did report my earnings and ssn to thier accountant for their tax info of 2012. I only make $250. a week, are they required to pay my taxes and will it come out of my pay? Also how do I figure the average pay for nannies of 4 children? thanks for your help.
Posted: May 28, 2013 at 9:46 AM
Stephanie Breedlove
Hi Joshua! Before I answer your question, I'd like to say thank you for the service you provided to our country.

In terms of hiring a caregiver, the income you make should not impact how the employment situation will be for whoever you and your wife decide to hire. You will still be considered a household employer and will be responsible for the appropriate payroll and tax requirements. I would however suggest talking to someone at your local VA office to see if there are any special rules concerning the hiring of a caregiver.
Posted: May 15, 2013 at 12:06 PM
I am 100% disable vet all my income is tax free my wive gets a caregiver check from VA thats tax free also but how would it work if we hired someone to help witch is ok to part of her va to hire help put we never have to file taxes all income tax free benifits and since her check is tax free for help with my care and were i cant handle the kids by myself alot she doing some schooling so were looking for someone to help around house kids and me when im feeling down ?we can list sencondary caregivers on the va caregiver program but ony the primay gets paid and its tax free benifit and the primary just got to pay any help needed how would that work
Posted: May 13, 2013 at 7:31 PM
Stephanie Breedlove
Hi Brandy! If your part-time babysitter earns more than $1,800 this year, you will need to go through the process of setting yourself up as a household employer and paying the appropriate employment taxes. There are quite a few things you'll need to familiarize yourself with (too many for me to list here), so what I would suggest is visiting our website,, and taking a look at our Compliance Checklist ( This will have all the items you will need to complete to stay in compliance with all the tax and labor laws concerning household employment. If you get stuck, please feel free to give us a call. Good luck!
Posted: April 29, 2013 at 2:57 PM
Brandy M.
I'm totally confused about all of this. I have never been through a service like this or had to pay someone besides a daycare provider to watch my son. So what do I do for a part-time babysitter? Can someone please message me?
Posted: April 28, 2013 at 10:38 PM
Stephanie Breedlove
Duvina: Your situation is one we see quite often. In tax terms, right now you are being paid a net (after taxes) wage. So if you want to take home the same amount moving forward, the family will need to figure out your gross (before taxes) wages. To do this, use our nanny tax calculator ( and select the Net Pay option. Make sure you have your W-4 information handy because that will affect your gross wages. As far as your mileage is concerned, the family should reimburse you at 56.5 cents per mile. This is not taxable compensation, so they can just include it on top of your net wages each pay period. Just make sure the family is keeping track of your mileage so you are accurately paid.

Tiffani: The family will provide you with a W-2 at the end of the year, so don't worry about having to generate one on your own. As far as taxes are concerned, the household employment industry is different than most occupations because only Social Security and Medicare taxes are required to be withheld from your pay. Federal and state income taxes are still required to be paid, but are not required to be withheld by the family. In your interview, I would suggest asking the family if they will withhold income taxes. If they do not, you have to either pay them in 4 estimated payments throughout the year to the IRS using Form 1040-ES or all at once when you file your personal income tax return. If you choose the all at once option, you may have a tax bill rather than a tax refund.
Posted: April 15, 2013 at 10:40 AM
Photo of Tiffani H.
Tiffani H.
Reading what most people wrote on this blog, and i am still very confused. I have an interview this weekend and the Mother wants to take out takes. She wants me to do a normal w2. She has 3 babies, all no younger then 3. She is 42. She is married. She has her on accountant. The mother has her own business of owning a Home Health Service & Her own medical supply company. She already has two other nannies, who one works 5am-5pm and the other 5pm-5am. She would need me from 10am-7pm. She did not tell me my pay, we will talk about that at the interview she said. I hope i wrote as much info as a could. As i am seriously confused. DO I PAY BACK AT THE END OF THE YEAR? So many people say yes, then some say no. But if yes, why? If no, how? Please someone take the time and break it down for me i would greatly appreciated it.
Posted: April 13, 2013 at 12:21 PM
Photo of Duvina F.
Duvina F.
my client has been paying me cash, and know we are going to use W-2, i still want to get paid the same amount.. so my hourly will go up. Now i want to get payed on my pay check my gas mileage. Can my client rather not pay gas mileage, so at the end of the year for taxes could i claim my mailege for reminburment.
Posted: April 12, 2013 at 12:40 PM
Stephanie Breedlove
Kimberly: I'm very impressed that you are taking the initiative to understand how your taxes work and what your obligations are. Many household employees don't realize that families are only required to withhold Social Security and Medicare taxes. To answer your question, the IRS and the Minnesota Department of Revenue will allow you to make estimated tax payments 4 times per year to offset your year-end income tax liability.

Abigail: Your son does not need to report the money his ex-wife is giving to him. As the father, he is simply spending time with his child and is not an employee. If you do decide to take over the childcare responsibilities for your grandchild, I would take the conservative approach and have Social Security and Medicare taxes withheld. Your daughter-in-law will need to establish herself as a household employer with the IRS and state agencies to get this process started.
Posted: April 09, 2013 at 11:12 AM
I have two questions: My son and his wife are divorced, but he has been the primary caregiver for his son. she is paying him a small amount, but neither is claiming the expense or income. Is this correct? I am thinking of taking over for my son so that he can get a different job. How should my wages and taxes be handled by my daughter-in-law?
Posted: April 07, 2013 at 2:58 PM
Photo of Kimberly A.
Kimberly A.
I just started with a new family who is legally taking out the medicare an social security tax (i live in MN), and I'm wondering how I independently go about paying my federal and state tax. Quarterly? I don't want to have to pay more at the end of the year, so want to go about this the right way from the beginning.
Posted: April 04, 2013 at 6:49 PM
Stephanie Breedlove
Hi Steph,

I'm really sorry to hear you didn't have taxes withheld last year. Believe it or not, I hear from nannies just like you every year. With very few exceptions, nannies are required to have Social Security and Medicare taxes withheld from their pay and should either pay or have federal and state income taxes withheld as well. And just like all other workers, nannies are required to report their income and pay the appropriate taxes. The good news is you have a couple of options at your disposal for getting this all straightened out:

1) You can talk with the family and ask for them to take care of their nanny tax obligations. They will need to catch up on paying the previous 4 quarters worth of employment taxes and issue you a W-2 so you can file your personal income tax return. Feel free to use our website,, as a resource for all the family's household employer tax requirements. It will also be a good opportunity for you to ask for an employment contract so you and the family can be on the same page moving forward. If the family agrees to this process, you will most likely need to apply for an extension on filing your personal income tax return as the catching-up process for the family will probably not be complete before April 15th. I would suggest asking for help from a tax preparer to make sure this is handled properly.

2) If the family is not willing to go through the process of becoming nanny tax compliant, you will have to file Form 4852 which substitutes for the W-2. By filing Form 4852, you fulfill your obligation of reporting your wages and paying the taxes that should have been withheld. Just be aware that filing this form can trigger an IRS audit for the family.

I hope you get everything worked out in a positive manner Steph!
Posted: April 04, 2013 at 3:41 PM
My employer just informed me she hadn't been paying for my nanny taxes. I thought she was, do I have to pay those?
Posted: April 04, 2013 at 1:27 PM
Stephanie Breedlove
Hi Barbara,

The Tax Credit for Child and Dependent Care (IRS Form 2441) is available for families who have childcare expenses. However, if the family is not paying taxes on your wages or withholding taxes from you, they will not be eligible to take the tax credit.

Because you are a household employee and not an independent contractor, you don't pay taxes on the wages you earn. Instead, taxes are supposed to be withheld from your pay throughout the year. The only exception is federal and state income taxes which technically don't have to be withheld from your pay, but must still be paid. Nannies who don't have these taxes withheld throughout the year will likely have to pay them in a lump sum when they file their personal income tax return.
Posted: April 01, 2013 at 10:14 AM
Barbara Cooley
I am a nanny and they told me that they do the child care credit but they do not take out taxes. So does that mean that I do?
Posted: March 30, 2013 at 4:02 PM
Stephanie Breedlove
Hi Christina!

Based on your description, it does sound like you had a household employee for 5 months. Because there were no taxes withheld, you will either have to cover the nanny's taxes yourself or ask her to pay you back. There is a compliance checklist on our website ( that outlines the various items household employers must complete. I'm sorry to hear you are just finding out about your nanny tax obligations and I wish you the best of luck in getting this situation straightened out.
Posted: March 26, 2013 at 10:04 AM
Member Care.
Hi Kirsten,

Additionally, feel free to check out this article as well for additional information:
Posted: March 25, 2013 at 9:29 AM
Christina V
We have just been alerted to these tax rules now and want to do the right thing. I contacted her and she had been given a W-2 by only one of her 6 other employers last year. She was paid for services from 4/1- 9/1 of last year. The thing is we already paid her so what do we do now? I can't exactly ask for it back so I can withhold some of it. ;) I'm worried that a 1099 would be a 'red flag' but she did make her own hours (no kidding) and we didn't have her do chores or ever really give her any specific direction (she was awesome.) I know we showed here where everything was when she first started working but I'm not sure that qualifies as 'training'. She would often bring her own toys for the kids even, she had a wheelie suitcase full of craft and activity things. She really was awesome but I wish we had been better informed on the payment/tax process. Anyone have any suggestions on what to do next??
Posted: March 22, 2013 at 4:49 PM
Stephanie Breedlove
Hi Kirsten! Congratulations on your first job! There is a myriad of different requirements the family will have to do in order to pay legally. The main things are to withhold taxes from your pay and file and pay the employment taxes. You are required to have Social Security and Medicare taxes withheld from your pay and I would recommend federal and state income taxes be withheld as well.

The family will also pay Social Security and Medicare taxes on the wages they pay you and will have to pay unemployment taxes and perhaps another small tax depending on what state you live in.

I would recommend both you and the family visit our website at and familiarize yourself with all the nanny tax obligations. They are unfortunately too much for me to cover in this type of forum. Please feel free to call our office as well and one of our staff can help answer your questions.
Posted: March 20, 2013 at 12:32 PM
Photo of Kirsten J.
Kirsten J.
I just started my first nanny job and I want everything to be legal. My employer has never had a nanny before so neither of us know exactly what to do. How do we get started?
Posted: March 20, 2013 at 4:51 AM
Stephanie Breedlove
Hi Nicole! Traveling with your nanny isn't too different than when she is working in your home in terms of how she is compensated. Generally speaking, if she is performing her nanny duties, she is on the clock and should be paid for every hour she works. Even if she is sitting in a chair on the beach watching your kids, she is still performing her nanny duties. She does not have to be compensated for any free time she has on her own or for the time she is sleeping.

What I would suggest doing is making sure you and your nanny are on the same page about the hours she will be expected to work. It will probably be different from what you're both used to. Remember, your nanny is required to be paid overtime for any hours over 40 she works during a 7-day workweek. I hope that answers your question and have fun on your business trip!
Posted: March 13, 2013 at 10:22 AM
Nicole V.
can anyone commemt on how you treat paying your nanny when she travels with you. i already pay her as an employee but not sure how to treat her pay when she is on a business trip with our family, aside from covering her usual expenses.

Posted: March 12, 2013 at 11:37 PM
Stephanie Breedlove
Hi Hannah,

I'm really sorry to be the bearer of bad news, but household workers are one of the few types of employees that are only required to have Social Security and Medicare taxes withheld from their pay. Federal and state income tax withholding is optional, so the family is not doing anything wrong. However, I always recommend families withhold these taxes from their employees so your exact situation does not come up. Unfortunately, you do owe the $1,000 you mention because nearly everyone who earns wages has an obligation to pay federal income taxes on it. What you owe is an aggregation of 11 months' worth of federal income taxes that could have been deducted from your pay each pay period.

The best way to fix this moving forward it to talk to the family you nanny for and let them know you want federal income taxes withheld from your pay. You should fill out a Form W-4 which is a worksheet that will calculate the number of allowances you will take. The family will then use that form to determine how much in federal income taxes should be withheld every pay period. This will ensure you won't owe $1,000 this time next year. There is a handy nanny tax calculator on our website at that will allow you to download a W4 and figure out how much in federal income taxes will be deducted from you pay based on how you fill it out.
Posted: March 12, 2013 at 10:19 AM
Photo of Hannah W.
Hannah W.

Last year I worked as a Nanny in home for a family in FL. I made 18906.07 in wages over an 11 month period. I just received my W2 and it shows that my employer did not withhold any Federal Income Taxes. This is causing me to owe over $1000 in taxes... something that is completely shocking to me. I was under the impression that the employer was required to withhold all taxes, Federal, Social Security and Medicare. Was I wrong in assuming this? Is there anything I can do or am I stuck paying this massive amount? Thanks in advance for your help.

Posted: March 11, 2013 at 5:18 PM
Stephanie Breedlove
Hi Hilary!

Families in Oregon can technically pay a nanny a fixed weekly amount, but I don't recommend it because nannies are non-exempt employees according to the Fair Labor Standards Act and must be paid at least minimum wage and overtime for all hours worked over 40 during a 7-day workweek. In Oregon, minimum wage is currently $8.95 per hour. If the nanny's hours vary week to week like yours seem to do, it affects your hourly rate of pay which risks dropping below minimum wage. However, you cannot determine if you are below minimum wage by calculating it based off the $325 check you receive every week. That is your net (after taxes) pay and minimum wage is calculated based off your gross (before taxes) pay.

My recommendation is to ask the family to pay you hourly. Since you say they are paying taxes, it will be much easier for them to calculate their tax payments this way. Right now, they have to "gross up" your pay every single week to account for any change in your hours, including overtime. This is the only way to ensure they are paying the correct amount of employer taxes. You should also ask them about your W-2. If they have paid taxes throughout the year, it will be fairly easy for them to provide you with one and you will need it to file your personal income taxes.

In terms of unemployment, if the family decides to place the child in daycare and lets you go, you will most likely qualify for benefits if the family has been paying taxes. You would apply for benefits with the Oregon Employment Department and they will determine your eligibility based on your application and any response the family provides in respect to how you were let go from your job.

Lastly, you mention signing a form for the mother on behalf on her employer. This is most likely a form the mother uses to have your wages be applied to a Flexible Spending Account she has set up through her employer. Families can set aside up to $5,000 of their pre-tax wages in this account to pay for childcare expenses, which helps make hiring a nanny a little more affordable.

You certainly have a lot going on Hilary, and I feel like you and the family would benefit from a discussion on how you are paid and how your taxes work. Please use our website,, as a resource and I wish you the best of luck going forward.
Posted: March 06, 2013 at 12:08 PM
Hilary N.
Also I was never issue a w-2 or any other tax form by them, just the nanny contract when I first started. I also twice signed a form for the mother so that her employer would help pay part of or all of her child care costs.
Posted: March 04, 2013 at 4:27 PM
Hilary N.
I am extremely confused about my current situation. I work full time, 40 hours a week, sometimes up to 42 hours a week for a family as a live out nanny for 1 child. In my "nanny contract" they stated that they would pay my taxes. I work in Oregon and started out getting paid $300 a week. After a year they bumped it up to $325 a week. That's what I take home. Last week I worked overtime 170 hours, and was only paid $525 total for the week. Is that legal? And even if I work only a few hours over every week are they required to pay me overtime or can they just keep paying me $325? They pay me with a personal check every week. They are talking about putting the child in daycare and I'm afraid I might have to apply for unemployment but I'm not sure if I'll qualify? How will I know? And if it turns out they weren't paying my taxes what will that mean for me and them when I try to apply for unemployment? Any help in this grey area would be very much appreciated!
Posted: March 04, 2013 at 4:25 PM
Member Care.
Hi Lacy!

Here is an article you may find useful. You can use it as a guide when you're setting up a meeting with a nanny tax accountant.

I hope that helps!
Posted: March 01, 2013 at 3:03 PM
Stephanie Breedlove
Lacy, some accountants are very good at handling household employer taxes, but others are not. We have accountants refer their clients to us all the time because they either are not 100% confident in handling household employer taxes or they are too busy to keep up with all the payroll and taxes. On the other hand, Breedlove & Associates only handles household employer payroll and taxes.
Posted: March 01, 2013 at 10:53 AM
Photo of Lacy P.
Lacy P.
Ok thanks for the help. They suggested we go see an accountant, are all accountants up to date on these issues as far as you know?
Posted: February 28, 2013 at 7:49 PM
Stephanie Breedlove
Hi Lacy,

You are correct that the IRS considers you to be a household employee and that you should receive a W-2 from the family you nanny for. The family should actually be the one applying for a Federal EIN and setting up tax accounts with the state for unemployment insurance taxes and most likely state income taxes. I would suggest sitting down with the family you nanny for and have them visit our website, We have a compliance checklist on our site that will help them figure out what they need to do as a household employer. And please have them give us a call if they have questions.
Posted: February 27, 2013 at 10:32 AM
Photo of Lacy P.
Lacy P.
Hi I am a nanny and have been with the family for almost two years. When I had applied they had me apply for and EIN number and get "self employed". This year as I am doing my taxes I am seeing that I am defineatly not self employed, I am having to pay outrageous taxes due to being self employed with the Self employment tax. How should I handle the situation? I have read that I am a household employee and they should be paying half my taxes, and I should receive a w-2.
Posted: February 26, 2013 at 1:43 PM
Stephanie Breedlove
Hi Claudia,

The family would need to pay you at least the federal minimum wage of $7.25 per hour and overtime for the additional 5 hours if you are considered a household employee. However, without more details on the childcare arrangement you have, I can't 100% say you are a household employee because you provide care in your own home. You may be considered self-employed depending on who is in control of the working relationship. The IRS has a great page on their website called "Independent Contractor or Employee?" that I would suggest taking a look at.
Posted: February 25, 2013 at 10:07 AM
Photo of Claudia G.
Claudia G.
Hello Stephanie, in my case I got paid $125 a week for an infant for 45 hours or more from my home last year and the parents wants to claim what they paid me, do they have to pay me the minimum in order to claim or they can still do it?
Posted: February 24, 2013 at 9:06 PM
Stephanie Breedlove
Hi Linda,

There is a bit of legwork you'll have to do to get everything set up for your new employee:

- Register for federal and state tax IDs with the IRS and the agency in your state
- File a new hire report
- Have your employee fill out a W-4 so you can calculate her federal income tax withholding. If you live in a state with incomes taxes, your employee will need to fill out your state's version of the W-4 as well.
- Your employee will also need to fill out Form I-9, which verifies work eligibility

These steps cover the setup process. There are other responsibilities you'll have throughout the year as well and you can find those in the Answers section at As far as your dependent care FSA goes, you simply have to provide a record of your employee's wages to prove the money you are setting aside is going to a qualified childcare expense.
Posted: February 20, 2013 at 10:50 AM
Linda R.
We are hiring a part time caregiver for our child in our home. We would be over the $1,800 threshold per year, but I also contribute $5,000.00 to my dependent daycare through my employer. I am trying to find out exactly what we need to do in regards to taxes, forms, etc with the person we are hiring. I'm not sure what I need to do. Any information you could provide would be very helpful.

Thank you, Linda
Posted: February 19, 2013 at 11:49 PM
Stephanie Breedlove
Wow, there are certainly a lot of you with nanny tax questions. I'll address you each individually:

Jennifer Z: By making $5,200 last year, you should have had Social Security and Medicare taxes withheld from your pay and you should have received a W-2 from the family. If the family isn't willing to provide you with a W-2, you will have to file Form 4852 which substitutes for the W-2. By filing Form 4852, you fulfill your obligation of reporting your wages and/or taxes withheld, but please be aware that filling this form out could trigger an IRS audit for the family you work for.

Carol: You are considered a household employee, not self-employed, because you do not have control of the working relationship. You do not need to worry about Social Security and Medicare taxes being withheld from your pay or your daughter having to report your wages because you are exempt according to IRS Publication 926. This publication sets the tax rules for household employers and specifically states to exempt wages paid to a parent. However, the Fair Labor Standards Act (FLSA) does not have an exemption for minimum wage concerning parents, so you should be paid at least the federal minimum wage of $7.25 per hour.

Tammy: The FLSA defines a workweek as 7 consecutive 24-hour periods. The workweek can begin on any day of the week and doesn't have to coincide with the standard calendar week. So for overtime, any hours worked over 40 during what the employer defines as the standard workweek should be paid at 1.5 times the normal rate. The employer can change the day a workweek begins, but only if the change is intended to be permanent and not used to get around paying overtime to an employee.

Jennifer P: Since you provide in-home childcare, it's tough for me to determine with 100% certainty if you are self-employed or a household employee. If you are a household employee, then both families would need to provide you with a W-2. If you visit the IRS' website, there is a page entitled "Independent Contractor or Employee?" that has information to help you determine what you should be classified as. It has proven to be very helpful for many people in your situation.
Posted: February 19, 2013 at 4:04 PM
Photo of Jennifer P.
Jennifer P.
Hello, I provide care in my home for two families. They both pay me approximately $175 every 2 wks. I have given my SSN so they can claim childcare on their taxes , but neither provided me with a W2. Who is responsible for tax on my earnings, what form do I use to file my taxes, and what do I do when I don't have any tax to report? Am I required by law to have a EIN? Please help! I went on to throw some figures out there, I filled in my earned income $13400.00 as self-employed, my children as dependents and it wants to give me a refund...?
Posted: February 18, 2013 at 7:21 PM
Photo of Jennifer P.
Jennifer P.
Hello, I provide care out of my home for 2 different families. These families pay me cash approximately $150 every 2 weeks. I have provided them my SSN to be able to claim childcare on their taxes. How do I file my taxes, what form, and since tax has not been taken out who is responsible and what do I put down when filing mine so that I may get a return? Am I illegal without a EIN number?
Posted: February 18, 2013 at 7:00 PM
Photo of Tammy G.
Tammy G.
Stephanie at Breedlove. I have a question I saw that you had said nannies can be paid overtime/time & a half if they work more than 40 hrs w/in a 7 day work week according to the "Fair Labor Standards Act". Does it have to be w/in a 7 day work week? Or can it be anything over 40 hrs w/in a 5 day work week (Monday-Friday)???
Posted: February 18, 2013 at 4:56 PM
C. A. M.
I'm similar to Jennifer S., but I'm a grandmother keeping my own grandkids, ages 1 and 3. I drive to their home in a close-by city and pick them up, taking them to my home, then drive back to their city to take them to preschool/library activities, etc., then back to my home. Their parents pick them up at my home at the end of the day. I pay for their food, diapers, etc. Their parents pay me a small wage (much less than minimum wage!). Am I self-employed, and can my daughter claim what she pays me on her income tax? Carol
Posted: February 17, 2013 at 7:50 PM
Photo of Jennifer Z.
Jennifer Z.
I worked as a nanny and made about 5,200 for the year alredy did my fedral and family did them for me but that didnt withhold any either and didnt give me a w2 or 1099 they did claim me as childcare on there taxes ivalso have a daughter and am not sure what to do cause said didnt have to pay anything in dont knw if they did it right or not
Posted: February 15, 2013 at 9:50 AM
Stephanie Breedlove
Hi Kevin and Lynn,

You both have similar questions that are very common for this time of the year. Kevin, the difference between a household employee and an independent contractor lies in who is in control of the working relationship. Generally speaking, if you control the hours someone works, the job duties they perform and other aspects of the working relationship, the person is your employee and should receive a W-2. Without knowing the full details of your working relationship, I can't 100% say whether the caregiver is operating an in-home daycare or if she is your employee. However, if you visit the IRS' website and take a look at the "Independent Contractor or Employee?" page, you should be able to figure out where you stand.

Lynn, household employees are required to have a W-2 sent to them by their employer. It summarizes not only the gross wages you earned for the year, but also how much Social Security, Medicare and federal and state income taxes were withheld from your pay. Since you mentioned your employer is paying you on the books, these taxes will have already been withheld from your pay. The most common way you would be responsible for an additional tax liability is if the allowances you claimed on your W-4 resulted in not enough federal income tax being withheld from your pay.
Posted: February 14, 2013 at 11:18 AM
Photo of Lynn C.
Lynn C.
I worked as a babysitter from January-August. I had to leave the position and now am waiting to file my taxes since my employer told me after i was hired it would be an on the books positon since she was going through a nasty divorce My question is am I to recieve a W2 or 1099? and how much tax would I be responsible for this is my first time working for a person as apposed to a company. thanks!
Posted: February 11, 2013 at 3:42 PM
Stephanie Breedlove
Hi Jennifer and Nyree!

I hope both had a great weekend! Jennifer, the family you work for should have your SSN on file because they need it in order to provide you with a W-2 so you can file your personal income tax return. You can file your tax return by using one of the free filing services listed on the IRS' website.

Nyree, if you are considered a household employee, you should receive another W-2 from the family you work for, but it seems as if the tax return service you are using is indeed looking at you as a childcare business or independent contractor. Without all your information in front of me, it is hard for me to determine 100% whether that is the correct classification for you. I would highly suggest you visit the IRS' website and take a look at the "Independent Contractor or Employee?" page. You should be able to figure out where you stand. The tax rules for independent contractors or self-employed businesses are different than for household employers.
Posted: February 11, 2013 at 12:07 PM
Kevin K.
We take our son to a caregiver everyday. We call her a "nanny" but I don't think that term is correct, as she is in her own house, and also takes care of her own child as well as ours. We had intended on giving her a 1099-misc, but she is refuting this claiming she should get a W2, and that we are responsible for some of the tax responsibility. We paid her close to $20,000 in 2012. Is a 1099-misc appropriate here? She does not come to our home, and we do not consider her a household employee. Thanks.
Posted: February 11, 2013 at 10:39 AM
Nyree J.
Thank you Stephanie for your response. But I only made $2400.00 babysitting because I just started in August but I know I have to report it. Do I need to to reported the babysitting earnings on a Schedule form since I provided the services at my home? I have a regular full time job (not babysitting) that I get a W-2 for that I will be filing as well. Also it shows me other deduction to take as far as square footage of the home. Should i be using these deductions.It seems as if it showing me as a business owner/independent contractor. Right now it looks as if im going to be payiny out approx $600.00.
Posted: February 09, 2013 at 10:04 AM
Photo of Jennifer R.
Jennifer R.
I am a caregiver who works out of my home. I work mainly three days a week. I am paid 60 a week and work 12 hour days which total 36 hours. I have not filed taxes yet. The family that I work for asked for my ssn to file her taxes. Should I give it and what does that mean for me? How do I go about filing mine
Posted: February 09, 2013 at 12:41 AM
Stephanie Breedlove
Hello Charlotte,

Most states have income taxes that should be withheld from an employee's pay. I say "should" because household employees are not explicitly required to have state income taxes withheld from their pay. However, if it's not withheld, the employee may end up with a large tax burden at the end of the year.

As far as unemployment insurance taxes go, those are almost always taxes paid by the employer, so they are not withheld from an employee's pay. The exceptions (there always are a few in the tax world) are Alaska, New Jersey and Pennsylvania and they require a very small amount of unemployment taxes to be withheld from an employee's pay, but the majority of the tax is still paid by the employer.
Posted: February 07, 2013 at 9:26 AM
Photo of Charlotte V.
Charlotte V.
Do you have to withhold unemployment? Or State taxes?
Posted: February 06, 2013 at 5:42 PM
Stephanie Breedlove
Hi Nyree,

Since you made $6,000 last year, you definitely cross a threshold that triggers taxes being withheld from your pay and taxes to be paid by the family you work for. Any household employee (babysitter, nanny, personal assistant, etc.) that earns $1,800 or more in a calendar year must have Social Security and Medicare (FICA) taxes withheld from their pay. I would also recommend federal and state income taxes (if you live in a state with income taxes) be withheld as well - although it's not required for household employees. The reason is that if you do not pay these income taxes throughout the year, you could find yourself with a large tax burden at the end of the year.

The family you work for will also be required to pay Social Security and Medicare taxes on top of the wages they paid you, as well as pay federal and state unemployment insurance taxes. The family should have given you a W-2 by January 31 so you could report your wages, but you should ask again if you did not receive one. Unfortunately, if you don't get a W-2, your only recourse to legally disclosing your pay is to file your income tax return without it. You'll have to write in the total wages that should have been reported on that W-2 on line 7 of Form 1040 along with the letters "HSH" (code for household employment). This protects you because you've done what you're supposed to do as a taxpayer. However, the family needs to know that this could trigger an audit for them as well as make them liable for paying both the FICA taxes they should have withheld from your pay AND the FICA taxes they did not pay on top of your wages.

As far as your pay rate goes, without knowing the amount of hours you worked, I can't accurately comment on whether you were paid a "fair" amount. All I can tell you is that the Fair Labor Standards Act (FLSA) requires you to be paid at least the federal minimum wage rate of $7.25 per hour and that you should be paid overtime (time-and-a-half) for any hours over 40 you work in a 7-day workweek. This is a gross wage rate (before taxes), rather than a net pay rate (after taxes).

You also mentioned providing snacks and dinner for the child you care for as well as picking the child up from school. These expenses you incurred are considered reimbursable, but are not considered wages, so no taxes should be paid on them. Simply put, you should provide the family with the total cost of the food and they should pay you back for those expenses. To calculate your reimbursement for driving to the child's school to pick him/her up and taking him/her to your home, use the federal mileage reimbursement rate of 55.5 cents per mile (2012 rate).

I know this seems like a lot of information to take in all at once. If you or the family you work for need additionally resources or have questions, please visit or call for a free consultation. We'll be happy to help!
Posted: February 04, 2013 at 12:13 PM
Nyree J.
I work full time and I keep 1 child part time after school in my home. I make 500 a month for keeping the child. The mom didn't take out taxes and I didn't set any aside. Now she is reporting to the IRS and it looks as if i'm going to be responsible for paying all the taxes. it woulnt be a problem if the money was worth it but that means I would have made approx.$5.00 an hour if that much. I don't think its fair. I didn't keep any of the receipts for food,and other things I provided. I provide snack,dinner,comb hair,required to bathe,have homework completed and pick up from school. Can I deducted anything without receipts.
Posted: February 01, 2013 at 5:55 PM
Stephanie Breedlove
Hi Angel,

You definitely have a lot of factors going on in your situation and it's admirable that you take care of your niece and that you and your sister understand the need to pay legally. Before I begin to answer your questions, I want you to know that because I don't know what state you live in, I'm going to give you what is accurate for MOST states. Also, because you only gave me information on how your sister is paying you, all my answers will focus on that situation.

First, you are correct that you MUST be paid at least the federal minimum wage for the first 40 hours you work during a 7-day workweek according to the Fair Labor Standards Act (FLSA). Federal minimum wage for 2013 is $7.25 per hour. Any hours you work over 40 MUST be paid at an overtime rate of time-and-half, or 1.5 times your hourly rate. That means at a minimum, you need to be paid $10.88 per hour for every hour over 40 you work in a workweek. Since you said you work 45 hours per week, you should earn a minimum of $344.40 per week, which you clearly do because you said you make $600 every week in salary.

That being said, I highly recommend you and your sister negotiate an hourly rate for you to be paid on. The reason is that given your current $600 per week in salary for 45 hours, you are being paid roughly $12.64 per hour for your first 40 hours of work and $18.96 per hour for the additional 5 hours. Any fluctuation in your hours therefore affects your hourly rate, meaning that some weeks you could be underpaid and others you could be overpaid. It will be much easier for you and your sister to keep track of your overtime if you can agree upon an hourly rate.

I understand you are concerned with some additional weekend and overnight time you spend with your niece. This is a conversation you should have with your sister to define when you are working and when you are simply visiting. If you are working, you need to be performing your work duties and your sister needs to be compensating you for those hours. You mention wanting to have a contract set up between you and your sister and that is a fantastic way to make sure everyone is on the same page.

That brings me to your final question about vacation and sick days. The FLSA does not require household employers provide their employees with vacation or sick days and almost all the states do not require them as well. However, this topic can be addressed with your sister when the two of you are writing up your contract. As long as you have an employment contract in writing, you are entitled to the benefits in it.

I hope I answered all your questions thoroughly Angel and I would recommend you and your sister visit our website at and use our budget calculators. You'll be able to figure out EXACTLY what taxes should be withheld from your pay and what taxes your sister will need to pay given the state you live in. There is also information about tax credits your sister can use to help save money on the taxes she will have to pay.
Posted: February 01, 2013 at 4:13 PM
Sorry,it cut,me off. Basically,I want to know what my rights are for compensation. Do I legally, have to receive minimum wage? Overtime? Contract wise what about vacation and sick days? Ive been watching her for 18 months and have called out once for sick and vacation I actually had to take her with,me to another state to even continue to recieve my pay. Is there a, legal minimum given like so, much vacation earned per hour worked? Its just very difficult figuring this out legally and being related so any information is helpful! Also where whe re do I draw the,line of overtime and watching her overnight or on the weekend...afterall she is my,niece so I do spend time with her outside,of work. If she ask I ask for pay but don't get it
Posted: January 31, 2013 at 3:06 PM
So I am a nanny for two families. I go to one family house and my sister drops off my niece and I watch her as well.
I get 600 a month from my Sister for 45 hours a week under the table. We.are.trying to establish everything legally
Now with a contract and taxes taken out. Obviously 600 a month for full time work, isn't, much and going the tax route moo
Woukd take a chunk out of,my already small, paycheck. My cousin who,is also a nanny have he the info when we do,it want
All,correctly she,legally has to pay me minimum wage per hour. It, makes sense to me but can't find any info on it. Doors she have to? We both want to do everything legally and fairly. Business with family isn't easy but in the end I don't dont
Posted: January 31, 2013 at 2:57 PM
Stephanie Breedlove
Hi Lisandra!

You bring up a VERY common question we hear all the time from our Breedlove & Associates clients. I'll address the overtime portion of your question first:

Because nannies and other household employees are considered "non-exempt" workers, the Fair Labor Standards Act (FLSA) says they must be paid overtime (time-and-a-half) for any hours they work over 40 in a 7-day workweek. The main exception to this rule is if your nanny is a live-in nanny. Live-in employees do not have to be paid overtime, but they still must be paid their normal hourly rate for all hours they work.

As you can probably see, if your nanny ends up working overtime and you pay her a weekly salary, you've got a bit of math to do. You'll have to convert her salary to an hourly rate spread across 40 hours and then calculate what her overtime rate will be and apply it to her overtime hours. It can be quite tedious and time-consuming, especially if your nanny's hours change from week to week.

That's why we recommend simply negotiating an hourly rate with your nanny to make life a bit easier. For instance, if you pay her $16/hour, her overtime rate will be $24/hour for the hours over 40 she works in a workweek. Those 2 rates can be applied every week and will help you avoid any payroll calculation mistakes.

If you need any other assistance, feel free to visit or give us a call.
Posted: January 30, 2013 at 11:31 AM
Lisandra F.
Can you set a weekly salary for a Nanny or do you have to pay overtime for hours worked over 40? My husband and I are in retail so we never work 40 hours a week.
Posted: January 29, 2013 at 3:02 PM
Stephanie Breedlove
Hi Maria Ana R.,
My name is Stephanie Breedlove, founder and CEO of's payroll team at Breedlove & Associates. If the family paid you more than $1,800 during the calendar year (probably did if you worked for 7 months), they should have withheld FICA taxes (social security and medicare) from your pay. Withholding your income taxes is recommended but not required by law.

Assuming the $1,800 threshold was crossed, she is required to give you a Form W-2. You should ask again, but if you don't get a W-2 from her, your only recourse is to file your income tax return without it -- you'll have to write in the total wages that should have been reported on that W-2 on line 7 of Form 1040 along with the letters "HSH" (code for household employment). This protects you because you've done what you're supposed to do as a taxpayer. However, your employer needs to know that this could trigger an audit for them.

There is no distinction between "nanny" and "babysitter" from a tax perspective. Once you cross the wage threshold of $1,800 from a family, you're a formal employee -- and all household employees (i.e. nannies, babysitters, doulas, home health aides, housekeepers, etc.) are treated the same.

Hope that helps and best of luck...try or call us for more info.
Posted: January 28, 2013 at 11:23 AM
Photo of Maria Ana R.
Maria Ana R.
I worked as a nanny for a family for 7 months last year. No deductions/taxes were taken out of my pay. There were no discussions regarding taxes from the beginning but I would like to file my income tax. I understand I am classified as a household employee since I provided service in her home. Should I get a W2 from my former employer even if nothing was withheld from my pay? I have emailed her asking about it 3 weeks ago but did not get a response. Also, is there a difference between a nanny and babysitter as far as taxes are concerned? I recall her refusing to refer to me as a nanny and preferred babysitter instead. Thanks!
Posted: January 26, 2013 at 12:34 AM
Photo of Heather P.
Heather P.
I started a nanny Job this last June, and Have been paid under the table, as I didnt really realize there was all this stuff to go along with it. But since I Have not filed yet, I would like to do it the correct way. I have made $5000 with this family, and had talked to the father of the family about taxes and what type of form he plans to give me. And asked him if he had read into nanny taxes at all. and then I explained what I found. He said he would look into it more, and got back to me this morning, and says that his tax person said I am self employed (which I am not because I work in there home and do what they ask). SO my question is what should I do, and can how can I figure out how much my employer should pay and how much I should pay? Is it too late for them to pay anything since the year is over?? Thanks for the help!!
Posted: January 22, 2013 at 12:56 PM
Stephanie Breedlove
Elizabeth B.,
You should not get Form 1099s from your families. They are legally your employers. However, if each of the families pays you less than $1,800 in a calendar year, they don't have to give you a Form W-2. If you're under the threshold and don't have a W-2, you report the income on your 1040 by putting the total of all wages not reported on a W-2 on line 7. Then write the letters "HSH" (the code for household employment). Alternatively, you can fill out Form 4852, which is the substitute for Form W-2. The first method is easier if you have several families.

Regarding mileage, you can itemize your mileage expenses on your personal income tax return -- IF it wasn't reimbursed by your families and it's on-the-job driving...commuter miles to and from the job site cannot be itemized.

Hope that helps!
Posted: January 21, 2013 at 10:28 AM
Photo of Elizabeth B.
Elizabeth B.
HI! Any input will be greatly appreciated! I'm not a full time nanny, but I nanny for 3 different families 3-4 days a week & I occasionally babysit on weekends. I want to pay taxes, so I have proof of income. Should I get filed a 1099 from each family I nanny for? How should I claim the money I make on the weekends, if I babysit for different families throughout the month? Should I be considered "self employed" & keep track of the miles I drive & gas?? So Confused!!!!! :) Thanks in advance!
Posted: January 18, 2013 at 3:54 PM
Stephanie Breedlove
Jennifer, this is Stephanie Breedlove, founder of's payroll service provider, Breedlove & Associates. You are correctly classified as "self-employed." The law draws a distinction between a caregiver working for an individual family in their home and someone like you who is operating a daycare business out of your house. No need to concern yourself with the household employment tax doesn't pertain to you.
Posted: January 16, 2013 at 7:17 PM
Photo of Jennifer S.
Jennifer S.
If I watch children in my own home for several different families, how does all of this apply to me? I am used to being in direct sales most of my adult life and receiving a 1099 and filing taxes myself. I was able to take some very generous deductions as such being "self-employed". Going into babysitting, I was expecting the same thing. Not all of my families are "claiming" me, but I do intend to report the ones that are.

I provide all food and drinks for the kids in my home, so according to my knowledge, I could deduct the standard things that I have been used to deducting for years with my direct sales business such as a portion of the rent/mortgage for operating out of my home, my cell, my internet, mileage, and now, a portion of my grocery bills as well. Am I completely wrong on this? Hope not!!!! I have no intention of skirting the laws, just was oblivious to the fact that this was going to be considered anything other than "self-employed". I repeat, I am not a nanny, but rather operate out of my own home. I do not have state licensing nor do I have a business name/LLC/or other licensing.

I keep track of all my income, whether the families are claiming me or not, and I issue homemade receipts to my families that request it. Any advice/help is much appreciated! :)
Posted: January 16, 2013 at 1:29 PM
Stephanie Breedlove
The casual babysitting threshold is $1,800 in a calendar year. Below that amount, the family does not have to withhold any taxes from your pay or pay into your social security and medicare account. At $2,400 in a year, however, they are required to report the wages and provide you with a Form W-2 at the end of the year. The good news for them is the employer taxes would be about $200, which will be more than offset by childcare tax breaks.

You are required by law to report all of your income on your Form 1040 -- even if you don't get a W-2 from your employer. So protecting her puts you at risk. (FYI...I don't know what the rest of your earnings are, but at $2,400 per year, you wouldn't have any income tax burden).
Posted: January 11, 2013 at 10:13 AM
MY friend wants me to babysit for her 3 days a week. I love this baby and if it's too confusing with the taxes, I would cheerfully do it for nothing. She wants to pay me $200.00 a month, but not have me claim it on taxes. I am not comfortable with that but don't want to get her in trouble. If I make $2,400 next year, will I get hit with big taxes if she doesn't want to do paperwork on me?
Posted: January 11, 2013 at 1:02 AM
Stephanie Breedlove
ShAUN, Obamacare will not affect household employers -- assuming you have less than 50 employees. : ) Entities with fewer than 50 employees are exempt from the health insurance mandate.

Having said that, if you contribute to your employee's health insurance, the amount you contribute is non-taxable compensation so neither you nor your employee have any taxes on that portion of the compensation. Additionally, if your employer contribution is at least 50% of the cost of the premium and the annual wage for your employee is less than $50,000, you can take advantage of the Health Insurance Tax Credit for Small Employers, which provides a tax savings of up to 35% on each dollar you contribute.

Bottom line is health insurance can be a smart part of the compensation package and provide real tax advantages. For more info, visit our Expert Advice section at
Posted: January 10, 2013 at 12:22 PM
So how does it work with Obama Care if the nanny is considered an employee? I read that beginning in 2014, it will require employers to offer health coverage to employees who log at least 30 hours a week, or pay a penalty starting at $2,000 per worker."
Posted: January 10, 2013 at 12:29 AM
Stephanie Breedlove
Hi Kate,

This is Stephanie Breedlove with Breedlove & Associates. We are's partner for household employer payroll and taxes. To answer your question, the law requires your nanny to be paid an hourly rate based on her GROSS wages.

Whenever you are looking at an average hourly rate or annual earnings, it is based on gross wages. The reason is that a nanny's net (take-home) pay will be different for most nannies because the tax bracket they are in determines the amount of federal income tax that must be withheld from their paycheck. Also, the state you live in will determine if and how much state income tax needs to be withheld.

Feel free to visit and use our calculators to help get a detailed breakdown of your nanny's net pay and the employer taxes you will need to withhold. And please give us a call if we can help you over the phone!
Posted: January 09, 2013 at 12:19 PM
Photo of Kate C.
Kate C.
Question about wages and paying the taxes. If we agree to a weekly take home wage and then I go and pay the pay the taxes over and above that weekly rate (so gross up my expenses), is it the gross pay or the take home pay that we should use to calculate the nanny's salary when figuring out her average hourly rate? Along the same lines, when I look at the average rate calculator on this site, does the hourly rate for my area include these taxes? Or exclude them? Anyone know how I can find out?
Posted: January 08, 2013 at 9:02 PM
Photo of Beccy A.
Beccy A.
Nanny tax Blog

I am a nanny & babysitter. I need to show my tax return as proof of income to apply for loans, example: I'm trying to buy a minivan so I can work with 2 or 3 families & have up to 4 children at one time, so I can take home more money. That being said, I need to claim both my nanny jobs & my babysitting jobs on my taxes so I can qualify for a loan I know I can afford.

Currently I nanny 2 or 3 families & I am getting w2's. I wrote up my own agreement when the families asked me to work for them & I asked to be given a w2. (I did this, because of the first year/first family, together the family & myself were clueless about nanny taxes, we agreed wages would be under the table, but then I got a 1099 because they wanted the tax credit. Not only did I have a lot of taxes to pay, I didn't want to claim my babysitting wages because I didn't want to pay even more taxes (I was still clueless about why this was a stupid thing to do); so my taxes, my only acceptable proof of income, showed I made less than what would otherwise allow me to qualify for that auto loan.

With two families, or a nanny share, I can get paid more with the income combined but the families individually save money & pay me less.

However I babysit for about ten other families evening and weekends. One family paid me a total of $900 for the year, several other families paid me $700 each for the year, others less or more. I consider my babysitting as self employed work so I will be paying self-employed taxes, but the families don't need to file anything and can pay me cash. I am sending these families a year end receipt and a w9 with my newly acquired EIN, so they can file to get the tax credit if they want, but also to make the families aware that as a career nanny/babysitter, I am in fact paying taxes on the cash wages they pay me. But my taxes I owe is a lot more than I saved up to pay, & now I know I need to pay quarterly taxes this year. Because I am paying higher, self-employed taxes on my babysitting wages, but not my nanny income, I will be raising my babysitting rates to make up for all the self-employed taxes I am paying for those cash wages.
Posted: January 08, 2013 at 7:27 PM
Brenda L.
I am so happy to see all of this wonderfully helpful information. I am soon starting a new part time nanny position. The family asked for me to get an LLC for them to pay me under. After talking with two accountants, I found out that, first, the cost to start an LLC is very expensive plus you cannot pay an hourly employee under an LLC. Thanks for all of this terrific info!
Posted: January 06, 2013 at 7:52 PM
Photo of Rosemary D.
Rosemary D.
Some family wants to pay cash to avoid paying the minimum wage and tax. I want to get paid legally but what if the family hiring me is the one that wants to save some $$$ ?
Posted: December 01, 2012 at 10:38 PM
Ronald G.
As our current laws stand, the IRS holds all the cards. Most, if not all, "nannies" are considered employees under the current interpretation of our tax codes. In some cases, such as BEVERLY M. points out, certain care givers can easily be considered independent contractors -- of course, certain criteria must be met to satisfy the IRS. Contracts and work relations for care givers can be done where the care giver has their own contract and stipulates the range, extent, time(s), etc., of services they will perform and place themselves in control of the services they offer. If done properly, it has been done with complete legitimacy: A care giver is not an employee simply because of their title, it is the legal/contractural working relationship that defines their status.

Also, on a subject that was mentioned in one comment above: "how do we value the room & board part of compensation? Do we and she pay taxes based on the cash wages - or does the value of the room &board have to be factored in?" The IRS does indeed consider room & board to be be an "income" to the person receiving it. (But, good luck getting a caregiver to consider that in his or her overall wages). For people "requiring" a live-in caregiver, especially if it is a "medical requirement/necessity", the room & board "expense" can be deductible -- so, it is most certainly claimed as an income to someone. It's sad to say, but in our current taxation mess, anytime there is income, deductions, expenses, etc., there IS the IRS involved. Money coming in to one person vs deductible expenses for another is always going to be a two edeged sword under our current laws. If one can claim it, another must report it.

I agree with so many above that any GOOD care giver, whether for childcare or for disabled, or elderly, ill, etc., is worth more than all but the top 2% of families can afford to pay. They earn every penny! But, that being said, we all live in the "real world." For example, my family now finds itself needing someone on a 24 hour basis to care for our Mother who has suffered a major stroke. For as long as I can remember, Mom told us to "never put me in one of those nursing homes!" So, we looked around and found that neither insurance nor Medicare will pay for 24 hr. "home" care, and the average cost for someone to live-in is somewhere around $25,000 to $30,000 a year! Mom's GROSS income last year was only $16,600, so where exactly will the "increase your nanny's salary so that her take-home pay doesn't take as much of a hit" money come from? It's just a common problem that is only going to get more common as more and more people are living longer.

I submit that the largest problem (for this and many, many other of our nation's financial woes) is the taxation system itself. What if NO income, of any sort, was taxed by the Federal Government? OK... I can see the eyes rolling already! Seriously, think about this: What if the taxation was purely a flat (i.e., EVERYONE paid the same rate -- hooboy, here we go) Sales Tax? . . . on all goods, products, services -- Every transaction. EVERYONE PAYS, EVERY TIME. No exceptions, no exemptions, no loop holes, and Absolutely NO "income" tax of ANY sort. Then, all these (tax) woes mentioned above would simply disappear. Just a thought.

Now that would be a great thing to be thankful for by next Thanksgiving Day, wouldn't it? Happy Thanksgiving everyone.
Posted: November 20, 2012 at 7:19 AM
Jennifer G.
Of all the nanny tax services out there, does anyone have a recommendation? Obviously, like anything, you probably get what you pay for, but is there a low(er) cost option that does the job well?
Posted: November 16, 2012 at 1:32 PM
Photo of Beverly M.
Beverly M.
What is the rule for taxes where the care is for a disabled person living in a care facility but they are paid for the hours they work by the disabled person, there are multiple assitants who come in throughout the day, they have many clients (other disabled people living all over town,) and they are working not more than 10 hours a week with this one person. Can't they be treated as independant contractors since they basically have their own business and run their own employment all week. I think they can. You can't compell them to do anything. They deliver a service and leave.
Posted: November 02, 2012 at 5:56 PM
Photo of Lynn D.
Lynn D.
Jason H., I would most definitely be willing to take home $400 a week for my caregiver services. I've done harder jobs for less. ANY job I have requires paying all of these taxes. If I get hired at $15/hr. to do a reception job in an office, I don't expect to take home all that money. My dear sir, THAT is "just how it is." Anything else is simply illegal, and also not fair to the caregiver. I need proof of my income to get a car loan, or a rental agreement, or a mortgage. How can I do that if I'm working under the table? That said, as a mom of five children, I definitely understand the difficulty of affordable child care, in fact, it is the reason we went with one income for many years because it was not worth my going to work after paying for childcare costs. However, the costs is not good reason to cheat the employee, or break the law. As unfortunate as it is... and I agree it would be nice if things were different... but as it currently stands, if a family cannot afford this kind of service so that it is fair and lawful to all concerned, I think they have no business hiring a household employee. I am appalled at the amount of people here who think it's "just okay" to hire people in this way. We are not talking about a weekend babysitter that you hire once a month so you can go to the show... we are talking about a household employee trying to make a real living working for you! If you want things to be easier or changed in this regard, take up your position with your local government representative and see if you can get legislation started on the matter. This industry is booming and changing, and we probably do need special tax laws put in place for household workers. That kind of change won't happen by ignoring the current rules. Besides, what kind of example do we set for our children if we simply break the rules that are difficult for us to follow?
Posted: October 31, 2012 at 1:45 PM
Lura M.
If I am a nanny for someone and they don't withhold any taxes, am I required to report my income to the IRS? How much will I owe if I use the example above, making 600$ per week for 52 weeks a year?
Posted: October 01, 2012 at 5:30 PM
Photo of Jason H.
Jason H.
Meegan A. - You are correct, the above example is comparing just that... But it misses the point. A nanny who is willing to work for $600 per week, is generally not willing to work for $468.03 per week. In addition, if $600 is my budget, then I can pay $600 cash, or I can pay about $530 and have taxes taken out, in which case the Nanny will get closer to $400 per week. Good luck finding a Nanny willing to work for $400 per week take home! :) - Again, I'm not debating the law (since that is clear), I'm just pointing out that it costs the Family more money to do it above board, no matter how you slice it.
Posted: September 30, 2012 at 6:40 PM
Katy O.
Thank you Nailah B. Your link to the IRS was very helpful!
Posted: September 27, 2012 at 6:09 AM
Photo of Virginia L. A.
Virginia L. A.
Anjeanette ... what was the outcome of the 1099 approach ???

Virginia A
Posted: September 08, 2012 at 6:43 PM
Imen Z.
what is the difference between a babysitter and a nanny? should I pay tax for my babysitter
Posted: August 31, 2012 at 4:22 PM
Photo of Nailah B.
Nailah B.
For those who have questions in regards to paying taxes for babysitters or part-time work, I've placed a link below that you should find helpful. In a nutshell, it depends on how much you're paying your employee within a given time (quarterly or yearly - See details in link).

See bottom of page 3 for requirements:
Posted: August 20, 2012 at 4:08 AM
Photo of Katie G.
Katie G.
I am currently looking for a position as a live out nanny. How do I go about asking about this stuff with the family????? Should I also consult a tax expert? Help!!!
Posted: August 13, 2012 at 10:30 AM
Photo of Vanessa M.
Vanessa M.
I am in school right now and am paying my babysitter $10/ hour to watch my 2 kids and clean the house. She will be working around 26ish hours a week so do I still need to do this since it isn't a full time position?
Posted: August 12, 2012 at 7:36 PM
Photo of Jennifer C.
Jennifer C.
@Robert H. -- I'm interested to know if you heard anything about your situation or how you ended up handling it. My husband and I are in the same boat right now...
Posted: July 22, 2012 at 10:51 AM
Photo of Jenni G.
Jenni G.
Alana W. did anyone answer your question? I am in the same boat as you. I am hiring someone for 3 or 4 hours a day during the week. Is she considered my nanny or a babysitter? Also what do people do about health benefits? Is this something that is required or expected for an employer to pay for?

Thanks for the help!
Posted: July 21, 2012 at 2:36 AM
Photo of Alana W.
Alana W.
How/where is the line drawn between babysitter and nanny? We would like to hire someone for 3 hours a day to watch our kids in the afternoons. I would qualify this as a babysitter but is that how the IRS would see it?
Posted: July 13, 2012 at 10:16 AM
Craig W.
If we are hiring a live-in nanny, how do we value the room & board part of compensation? Do we and she pay taxes based on the cash wages - or does the value of the room &board have to be factored in? Also, is there a standard amount usually "deducted"from gross salary to allow for the room & board?
Posted: July 06, 2012 at 3:20 PM
Diane W.
I don't consider paying cash as paying "under the table", a term that brings to mind a dishonest back alley transaction. Paying cash is the common sense, FAIR way for individuals, not corporations, to have help in the home. Turning simple things into complex time consuming and costly systems is a problem with our government as it is now. I'll bet an average person could run for office on this one platform and get some serious votes. End of rant.
As to using a 1099? I suppose I would if I paid a sum equal to a year's worth of wages vs casual babysitting dollar amounts. The sitter I have used was a college student that had more experience and knowledge about caring for twin toddlers than I had. I didn't tell her what and how to do things. I learned from her! Anyone who doesn't acknowledge that an experienced babysitter/nanny has a very specialized set of tools is misinformed.
Posted: April 24, 2012 at 2:53 PM
Robert H.
my wife and I are interviewing babysitter/nannies for a PARTIME position ,we are very confused by the bottom line of the contributions on our behalf.I am not aware of partime bennifits.We are looking for 21 hrs a week. does anyone know of fair alternative solutions to the nanny tax. We want to do the right thing however some of the applicants are young and trying to make a few dollars while they are pursuing their career. This is a temporary position.we can not afford alice from the Brady bunch.Any suggestions prior to selecting the person for our position and salary negotiations
Posted: March 06, 2012 at 8:49 AM
Photo of Meegan A.
Meegan A.
I just would like to clarify that when I say "family" (employer) and "nanny" (employee), I am referring to a technical employer/employee relationship in which the employer has an EIN (Employer Identification Number). Thanks!
Posted: March 01, 2012 at 6:38 PM
Photo of Gemini A.
Gemini A.
How about just hiring a temporary babysitter. Do I need to file taxes on her too? Even thought it will be only probably once a month.
Posted: March 01, 2012 at 12:24 AM
Photo of Meegan A.
Meegan A.
Hi Jason H., The above example is comparing the cost difference between paying the flat $600 per week, with no taxes deducted vs. deducting the taxes from the $600. The $131.97 in the example is not an additional amount paid by the family each week, but rather it is deducted from the already agreed upon weekly salary of $600 for the nanny. The family would have paid that salary, not matter what, even if it was paid under the table. That money is coming out of the nanny's pocket, not the family's pocket. The family is paying an additional $75.30 per week above and beyond the agreed upon salary, which comes to a total of $2,791.30 per year ($75.30 x 52 weeks). I know that's still close to $3,000 extra per year, but as mentioned above it's cheaper than paying fines, as well as nanny's who work in the family's home should be considered an employee, not an independent contractor. Having said that, Stephanie B., I hope you don't mind my two cents and I understand your willingness to take a pay cut to have your taxes paid, but you should not have to do that. The employer's portion of the taxes are their legal responsibility and should not be reflected in your wages. In fact, the above article states that a family, "may need to increase the nanny's salary so that her take-home pay doesn't take a as much of a hit." I'm sure you work hard for your money (okay, now I have that song in my head:)), so make sure your treated right. Okay that was pretty bad. It's time for bed. Best wishes and best of luck to everyone on this post!
Posted: February 28, 2012 at 1:16 AM
Photo of Stephanie B.
Stephanie B.
I'm working as a self-employed caregiver, which means I set aside a portion of my paycheck for taxes. It also means the family doesn't pay equal taxes, so I'm responsible for the (current) 13.3%
It's harder for me, because I'm not getting employer contribution, but at the same time I can work with multiple families without the concern of whether or not each one is filing my taxes correctly. As far as I can tell this approach is totally legitimate.
That being said, if I could work for a family as a household employee I would be willing to lower my pay rate as gratitude for their contribution.
Posted: February 08, 2012 at 1:00 PM
Natalie R.
I'm not a lawyer, but I know you can't issue a 1099. Caregivers are not contractors because their daily tasks are directed by their employer, rather than just the end result.

What resonated with me in this article (besides, you know, not breaking the law) is that if one really cares about their nanny/housekeeper, they will do the right thing and not ask them to commit tax fraud.
Posted: February 07, 2012 at 11:20 AM
Photo of Jason H.
Jason H.
With respect, the example given in the article is about a $200 a week difference between what the family is paying and what the nanny is getting.

That is over $10,000 a year. That is why so many are paid under the table. Families don't have the money to just pay an extra $10,000, and the nannies can't afford to work for that much less, so most nannies work under the table.

Is it legal? No, but that is just how it is.
Posted: January 20, 2012 at 10:49 PM
Photo of Mary M.
Mary M.
I worked as a live-in. I worked an average of 130 hours/week, paid approximately $2500/month with no benefits and had no regular days/time off each week.
I am no longer at that job.
Do I have any rights to OT time pay retroactively?
Who should I speak to about this matter?
Posted: January 20, 2012 at 11:11 AM
Photo of Jana L.
Jana L.
I can't imagine a set of circumstances where a nanny or sitter working in your home would be considered an "independent contractor" rather than a household employee for tax purposes. An employer who tells the nanny that she is an independent contractor likely is trying to skirt the law and avoid taxes, or simply doesn't understand what the law says. Either way, the IRS won't be amused. Since it is the employer's responsibility to withhold taxes and submit them, as well as report wages to the IRS and the Social Security Administration each year, it is very important that both parties are following the rules. If you are a nanny and your employer currently is not treating you as a household employee for tax purposes, you need to see an accountant or tax lawyer to get good advice on what the rules are that cover your situation, and then talk to your employer and make sure that you are both obeying all relevant tax laws. Obviously, that could be an awkward conversation, and I think it's too bad that some employers who don't want to follow the rules are willing to put an employee in that kind of situation.
Posted: January 16, 2012 at 8:55 PM
Amanda G.
To Stefanie F.: The taxes you have to pay on behalf of your nanny are the same as your employer pays for you. For every dollar you have withheld from your own checks for Medicare, SS etc (FICA), your employer is paying the same amount directly to the government on your behalf. If you choose to withhold her *income* taxes, (which is legally optional), then that actually comes from her own money and you submit it to the IRS when you file your taxes.

So if you look at the above example, you would withhold FICA and possible federal income tax from her pay, but you would ALSO pay unemployment and match her FICA dollars to the gov't which is the same that every other employer has to do.
Posted: January 05, 2012 at 10:27 PM
Jen M.
Kristen, from what I understand a nanny is an employee. The difference is that with a contractor, the "employer" only has control over the outcome of the service not the service itself. As a nanny, the "employer" can tell you how to perform the service at hand not just the outcome. Therefore, nannies are employees....technically. Hope that helps.

My question is that since the family is an employer and has to file for an EID, what kind of deductions are entitled to take? Is it only subject to the childcare credit?
Posted: December 30, 2011 at 2:57 PM
Photo of Kristen P.
Kristen P.
I am unsure if I am an employee or an Independent Contractor. I want to make sure I do everything right but don't know how to determine. I have looked at the IRS and it is a fine line. I was told that I would be treated as a contractor but this will be my first year filing and im suppose to file every quarter?? Im confused and need some support on how to resolve this issue and speak to my family. Can anyone help??
Posted: December 21, 2011 at 11:18 PM
Photo of Rita L.
Rita L.
Depending on how good of a wage you are getting, then you would want to pay taxes on the federal so that it goes into the right place, the problem with this is the person employing you, has to match you social security deduction, and most do not want to do this.
You are allow to make under a certain amount of money before paying taxes.
All the best
Posted: December 20, 2011 at 5:04 PM
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Posted: December 20, 2011 at 9:13 AM
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Ruth P.
if I am doing housecleaning, am I required to turn in the amount I get in cash? most of them one's I have talked with tell me no-dont claim it on my taxe's, but is this right?

Posted: December 15, 2011 at 3:34 PM
Photo of Stefanie F.
Stefanie F.
My employer doesn't pay my taxes. why should I pay for my nannies taxes????
Posted: November 08, 2011 at 8:36 AM
Anjeanette S.
I have heard of families doing 1099 work for babysitting services? Then the babysitter has to handle their taxes as a contractor. Any thoughts on this approach? I looked it up in several different sources, and 1099 income is a viable solution, but what are your thoughts?
Posted: September 10, 2011 at 8:49 AM
I learned the hard way. I know have hired a company, i choose GTM to handle all my nanny s payroll and taxes. I started with a service in which i wrote the checks and they just handled the taxes. (Trust me the service was far less expensive than the fine i recieved for late filings.)It worked great. Recently I switched to a service that does it all. Direct deposit and all my tax filings. It has been easier with our summer travel plans.(minimal price difference) I cannot say enough times to anyone who will listen "PAY LEGALLY, HIRE SOMEONE WHO KNOWS WHAT THEY ARE DOING! LET THIS BE SOMEONE ELSES CONCERN!!! THE FINES FAR OUTWEIGH THE FEES!"
Posted: June 28, 2011 at 11:50 AM
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