How do taxes work in a nanny share?
Updated November 6, 2026 · For 2026 · General information, not tax or legal advice
A nanny share is two (sometimes three) families sharing one nanny and splitting the cost. The arrangement is friendly; the tax treatment is not shared at all. Each family is a separate household employer.
What each family does
- Gets its own EIN and registers for state unemployment tax.
- Pays the nanny its agreed share directly, withholding 7.65% Social Security and Medicare from that amount and paying its own 7.65% match.
- Pays federal unemployment tax on the first $7,000 it pays, and state unemployment tax on its own wage base. Two employers means two wage bases, so the share pays slightly more unemployment tax in total than a single family would.
- Issues a W-2 for its wages and files Schedule H with its own return.
- Files its own state quarterly reports.
The nanny receives two W-2s and reports both. Nothing about the nanny's return gets harder.
Overtime in a share
Federal overtime looks at hours worked for *each employer*. If the nanny works 45 hours a week caring for both families together, each family employs the nanny for 45 hours and each owes overtime on its share for hours over 40. Splitting the week so each family "has" 22.5 hours does not avoid overtime when the children are cared for at the same time. Agree in writing how overtime and guaranteed hours are split.
Practical setup
- Put the split in the nanny contract: rate per family, who pays for what, and how sick days, holidays and one family's vacation are handled. Most shares guarantee the nanny their full pay when one family is away.
- Use the same pay schedule so the nanny gets one predictable payday.
- Keep the two payrolls completely separate. Do not route one family's share through the other.
CareTab is per household, so each family in a share runs its own account with its own employee record for the nanny. See what each share costs in the calculator.
Frequently asked
Can one family handle payroll for the whole share?
Not legally. Each family that pays the nanny is a separate employer and files its own Schedule H and W-2 for the wages it paid. Pooling money through one family creates a reimbursement mess.
Does the nanny get two W-2s?
Yes, one from each family, each showing only that family's wages and withholding.
Does each family hit the $3,000 threshold separately?
Yes. The threshold and the unemployment thresholds apply per employer. In a typical share both families cross them within weeks.
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