Nanny tax questions, answered

Short, specific answers for families who employ a nanny, housekeeper or caregiver. Updated for 2026. For your state's forms and rates, see the state guides; for your numbers, the calculator.

• Does my nanny get a W-2 or a 1099?A nanny is almost always a W-2 household employee, not a 1099 contractor. Here is why, what happens if you get it wrong, and how to fix it.
• Who counts as a household employee?The IRS definition of a household employee, who it covers (nannies, housekeepers, caregivers, drivers) and who it does not (agency staff, self-employed cleaners).
• How much can I pay a nanny before I owe taxes in 2026?In 2026 you owe Social Security and Medicare once a household employee earns $3,000 in the year, and federal unemployment tax once you pay $1,000 in a quarter.
• What is Schedule H and do I need to file it?Schedule H is the form household employers attach to Form 1040 to report nanny taxes. Who files it, what goes on it, and when it is due.
• Do I need to make estimated tax payments for my nanny?Schedule H taxes are due with your 1040, but the IRS expects you to pay during the year. Two ways to avoid an underpayment penalty: 1040-ES or a higher W-4.
• Do I need an EIN to pay a nanny?Household employers need an employer identification number for the W-2 and Schedule H. It is free, online, and takes ten minutes. What to do with it next.
• How do taxes work in a nanny share?In a nanny share each family is its own household employer: separate EIN, separate withholding on its share of wages, separate Schedule H, and the nanny gets two W-2s.
• What happens if I pay my nanny under the table?Paying a nanny in cash without taxes is tax evasion for you and costs your nanny Social Security credits, unemployment and proof of income. What it actually risks.
• I haven't been paying nanny taxes. How do I catch up?A step-by-step way to get current on nanny taxes you skipped: amend with Schedule H, issue late W-2s, register for state unemployment, and limit the penalties.
• Does a live-in nanny get overtime?Federal law exempts live-in domestic workers from overtime but not minimum wage. Several states require overtime for live-ins anyway. How to pay a live-in nanny correctly.
• Can I pay my nanny a salary instead of hourly?You can pay a nanny a fixed salary, but nannies are non-exempt, so you still track hours, pay overtime, and keep the salary above minimum wage.
• What are guaranteed hours and should I offer them?Guaranteed hours mean you pay your nanny for the agreed schedule whether or not you use it. Why nannies expect them, how to word them, and how payroll handles them.
• Do I have to give my nanny paid holidays, vacation or sick days?No federal law requires paid vacation or holidays for a nanny, but many states and cities mandate paid sick leave for household workers. What is required versus customary.
• Can I use a dependent care FSA or the child care credit for a nanny?Nanny wages qualify for a dependent care FSA (up to $7,500 in 2026) and the child and dependent care credit, but only if you pay the nanny legally and report their wages.
• How do I reimburse my nanny for mileage and gas in 2026?The IRS mileage rate is 72.5 cents through June 30, 2026 and 76 cents from July 1. Reimburse driving in your nanny's own car under an accountable plan and it is not wages.
• Do I owe nanny taxes for a summer or temporary nanny?A summer nanny usually crosses the $3,000 threshold within a few weeks. What a temporary household employer owes, and when a short-term sitter stays under the line.
• Do I have to pay taxes on a babysitter?Occasional babysitters rarely trigger taxes. A regular sitter who earns $3,000 in a year does, unless they are a student under 18. The rules in plain English.
• Do I pay nanny taxes if a grandparent or relative is the caregiver?Wages to your parent, spouse or child under 21 are generally exempt from Social Security, Medicare and unemployment tax. Other relatives are treated like any nanny.
• How are au pair taxes different from nanny taxes?Au pair stipends are taxable income to the au pair but exempt from Social Security, Medicare and unemployment tax. Host families usually file nothing but can claim the care credit.
• Do I need a nanny payroll service, or can I do it myself?Full-service nanny payroll companies charge $45 to $80 a month to file forms for you. Doing it yourself takes a few hours a year. What each path involves and costs.
• Nanny tax deadlines for 2026 and early 2027Every household employer due date for the 2026 tax year: quarterly state reports, estimated payments, the W-2 and W-3 by February 1, 2027, and Schedule H by April 15, 2027.
• Can I pay my nanny with Zelle, Venmo or cash?How you transfer the money does not matter for taxes. Zelle, Venmo, check and cash are all fine as long as you withhold correctly and give a pay stub.
• How much does a nanny really cost with taxes?Add about 10% to gross wages for employer taxes: 7.65% Social Security and Medicare, federal unemployment on the first $7,000, and state unemployment. Full 2026 breakdown with an example.