Does my nanny get a W-2 or a 1099?
Updated November 6, 2026 · For 2026 · General information, not tax or legal advice
Short answer: W-2. If you tell your nanny when to show up, what to do and how to do it, the IRS says they are your employee. That is true for full-time nannies, part-time nannies, after-school sitters on a regular schedule, and most housekeepers and senior caregivers you hire directly.
Why a 1099 is wrong
The W-2 versus 1099 question is not about hours or how much you pay. It is about control. A contractor runs a business: they decide how the work is done, serve many clients, and can send someone else. A nanny works in your home, with your children, on your schedule, following your instructions. That is employment, and the IRS has said so for decades in Publication 926.
Handing a nanny a 1099 does three things, none of them good:
- It makes your nanny pay the full 15.3% self-employment tax instead of splitting Social Security and Medicare with you.
- It leaves you exposed. If your nanny files for unemployment, gets hurt, or simply asks the IRS to determine their status (Form SS-8), you owe your half of the taxes plus penalties and interest going back to the start.
- It blocks you from using a dependent care FSA or the child and dependent care credit, because those require the caregiver's information on a W-2 basis.
What a W-2 actually requires
Less than you think. Once you pay a household employee $3,000 or more in 2026:
- Withhold 7.65% from each paycheck for Social Security and Medicare and match it yourself.
- Pay federal unemployment tax (0.6% of the first $7,000) and your state's unemployment tax.
- Give your nanny a W-2 by January 31 and send a copy to the Social Security Administration.
- File Schedule H with your own Form 1040. There is no separate business return.
Federal income tax withholding is optional for household employers; most nannies ask for it so they do not owe a lump sum in April.
If you already issued a 1099
You can fix it. File a corrected W-2 for the year, file or amend Schedule H, and pay the employer taxes you skipped. Your nanny amends their return to drop the self-employment tax. It is far cheaper to do this voluntarily than after an audit or an unemployment claim. See catching up on nanny taxes.
CareTab computes the withholding each paycheck, builds the W-2 figures and pre-fills Schedule H for every state. Run your numbers in the free calculator.
Frequently asked
Can I give my nanny a 1099 instead of a W-2?
No. The IRS treats a nanny who works in your home on your schedule as your household employee. You give them a W-2 and file Schedule H. A 1099 misclassifies them and shifts your share of Social Security and Medicare onto them.
What is the penalty for paying a nanny on a 1099?
If the IRS reclassifies the nanny, you owe both halves of Social Security and Medicare (15.3%) plus unemployment tax, with interest and failure-to-file penalties. Your nanny may also be able to claim their share back from you.
Are there any nannies who are contractors?
Only workers who genuinely run their own business: they set their own hours, work for many families at once, bring their own tools and can send a substitute. A full-time or regular part-time nanny does not fit.
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