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<\/a><\/figure><\/div>What are nanny taxes?<\/h2>
The nanny tax is a combination of federal and state tax requirements detailed in IRS Publication 926<\/a> that families must manage when they hire a household employee, such as a nanny, senior caregiver or personal assistant. The taxes include:<\/p> For the 2025 tax year, nanny taxes come into play when a family pays any household employee $2,800 or more in a calendar year (or $1,000 or more in a calendar quarter for unemployment insurance taxes).<\/p> Note:<\/strong> Your obligations will vary depending on where you live. Not all states have income taxes, while others require additional taxes to be withheld from your employee, paid by the employer or both. To see the specific requirements where you live, visit the nanny tax page for your state<\/a>.<\/p> According to the IRS<\/a>, a household worker is an employee if you control not only what<\/em> work is done, but also how<\/em> it is done. Generally speaking, that means the employee is coming to your home on the schedule you dictate while following your rules. It doesn’t matter whether the work is full time or part time or if you hired the worker through an online platform, they are still considered a household employee subject to taxes if you pay them more than $2,800 per calendar year. Families that misclassify their nanny or caregiver as an independent contractor by providing a Form 1099 for filing taxes can be charged with tax evasion.<\/p> Learn more about why a nanny is almost never considered an independent contractor<\/a>.<\/p> Now let’s get into the process of actually managing nanny taxes. There are four main action items that families need to take care of:<\/p> Apply for Tax ID numbers: <\/strong>You need both federal and state tax identification numbers in order to report your nanny taxes. You can get your federal employer identification number (FEIN) from the IRS<\/a> and use this number to obtain your state identification number from the appropriate tax agency in your state.<\/p><\/li> Calculate and track payroll:<\/strong> You need to accurately calculate your nanny’s gross pay, the taxes withheld from them and your corresponding employer taxes each pay period. (Use our nanny payroll calculator<\/a> to help).<\/p><\/li> File tax returns year-round:<\/strong><\/p> Typically on a quarterly basis, you will need to file state tax returns. Some states do require monthly or annual filings, so check the details in your area<\/a> to be sure.<\/p><\/li> You should send 1040 estimated payments<\/a> to the IRS four times per year.<\/p><\/li><\/ul><\/li> Complete year-end tax forms:<\/strong><\/p> You must provide your nanny with a Form W-2<\/a> by the end of January each year so they can use it to file their tax return.<\/p><\/li> The Social Security Administration requires you to file Form W-3<\/a> and Form W-2 Copy A. This lets them know that you’ve properly withheld FICA taxes from your caregiver and remitted FICA taxes of your own throughout the year.<\/p><\/li> You need to prepare a Schedule H<\/a> and file it with your federal income tax return.<\/p><\/li> Your state may also require an Annual Reconciliation form, which summarizes the state income taxes you withheld from your nanny. <\/span><\/p><\/li><\/ul><\/li><\/ol> If you’ve joined Care.com HomePay, we handle all of these procedures and returns for you. Check out how our nanny tax service works<\/a>.<\/p> Before a caregiver begins working for a family, there are three things they need to provide:<\/p> A Social Security number or an ITIN.<\/p><\/li> A completed Form I-9<\/a> with proper identification.<\/p><\/li> A completed federal W-4 form and corresponding state income tax withholding form (if you live in a state with income taxes).<\/p><\/li><\/ol> If your employee needs a federal and\/or state income tax withholding form<\/a>, we have up-to-date versions available to download.<\/p> Both families and their nannies actually benefit from proper tax reporting. Employers may be eligible for tax breaks<\/a> to offset the cost of their nanny taxes and have less to worry about if they’re audited by the IRS or the state. Caregivers also gain this peace of mind; plus, it’s easier to qualify for short and long-term benefits like:<\/p> Here’s a common example of what can happen:<\/p> The IRS estimates the average family can expect to spend 50-55 hours per year correctly managing the nanny tax process. This includes all the tax requirements listed above, as well as managing your employee’s payroll and responding to any notices sent by the IRS and tax agencies in your state.<\/p> Read more about how to pay nanny taxes yourself<\/a> and how to catch up and pay legally<\/a>.<\/p> Our HomePay experts can take care of all the work for you. From handling all the paperwork to actually filing your returns, we take care of everything. If this sounds like the better option for your family, contact our office at (888) 273-3356 or feel free to get started online.<\/p> Next Steps:<\/strong><\/p> The federal tax on a nanny includes Social Security and Medicare taxes (FICA), as well as federal income taxes. For 2025, families are required to address nanny taxes if they pay any household employee $2,800 or more in a calendar year (or $1,000 or more in a calendar quarter for unemployment insurance taxes).Remove<\/p> Nanny taxes refer to federal and state tax requirements that families must manage when hiring household employees like nannies. Understanding and complying with these taxes is crucial to avoid legal issues and ensure proper financial management.Remove<\/p> No, you should not pay a nanny with a Form 1099. Attempting to classify a nanny as an independent contractor by providing a Form 1099 is considered tax evasion by the IRS. Nannies are typically considered household employees, and families should provide a Form W-2 for proper tax reporting.<\/p> In a nanny share arrangement, it’s important to understand that both families involved are considered employers according to IRS guidelines. As such, both families have certain tax responsibilities. This includes obtaining federal employer identification numbers (EIN) and registering with the state. Each family is required to pay Social Security and Medicare (FICA) taxes, as well as federal and state unemployment taxes. <\/p>What makes someone a household employee?<\/h3>
<\/a>How to pay nanny taxes<\/strong><\/h2>
What household employees need to provide<\/strong><\/h3>
What are the benefits of paying nanny taxes?<\/h2>
What can happen if you pay your nanny under the table?<\/h2>
How much work will filing nanny taxes involve?<\/strong><\/h2>
Frequently asked questions<\/h2>
What is the federal tax on a nanny? <\/h3>
What are nanny taxes, and why do I need to pay them? <\/h3>
Can you pay a nanny with a 1099? <\/h3>
What are the tax implications of a nanny share? <\/h3>