Who Counts as a Household Employee
A household employee is someone who works in your home when you control both what work is done and how it’s done. That’s the test in IRS Publication 926, and a nanny whose hours and duties you set usually meets it.
Under IRS rules, wages you pay to these people don’t count for Social Security and Medicare:
- Your spouse
- Your child under age 21
- Your parent (exceptions apply)
- An employee under age 18, unless household work is their principal occupation
Which Nanny Taxes You Owe
Under the household employer guide, reaching certain wage thresholds determines which taxes you owe. FICA (Federal Insurance Contributions Act) tax is the combined name for Social Security and Medicare taxes.
| Tax | Who pays | Trigger | Rate |
|---|---|---|---|
| Social Security | You and your employee | $3,000+ in 2026 | 6.2% each, on wages up to $184,500 |
| Medicare | You and your employee | $3,000+ in 2026 | 1.45% each, no wage limit |
| Federal unemployment (FUTA) | You only | $1,000+ in any quarter of 2025 or 2026 | 6% of the first $7,000 per employee |
| Federal income tax | Your employee | On all wages earned | Varies |
| Federal income tax withholding | Your employee | Only if they ask and you agree | Based on employee’s Form W-4 |
FICA totals 15.3% of cash wages, split evenly between you and your nanny. You collect your nanny’s 7.65% share through withholding, which means holding back part of each paycheck to send to the IRS. You can also pay their share yourself.
If you pay less than $3,000 in 2026, none of those wages count for Social Security and Medicare. You may still owe FUTA, and you may owe state unemployment tax too. You can generally get a credit of up to 5.4% for state unemployment tax you pay, which can lower your FUTA rate to 0.6%.
Steps to Pay Nanny Taxes
Get an EIN
An EIN (employer identification number) is the number the IRS uses to identify you as an employer. You can apply for an EIN online through IRS.gov.
Complete Form I-9
As part of the hiring checklist, you and your nanny both fill out USCIS Form I-9, which confirms they can legally work in the US.
Pay During the Year
To pay as you go and avoid a possible underpayment penalty, make estimated tax payments with Form 1040-ES. Alternatively, you can give your own employer a new Form W-4 to increase withholding from your pay.
Give Form W-2 by February 1
If you paid $3,000 or more in Social Security and Medicare wages or withheld federal income tax, give your nanny Copies B, C, and 2 of Form W-2 by the February 1, 2027 deadline. Send Copy A with Form W-3 to the Social Security Administration.
File Schedule H by April 15
By April 15, 2027, file Schedule H (Form 1040) with your 2026 Form 1040. Any taxes due that you haven’t paid yet are due with your return.
How Nanny Pay Affects Your Return
Because Schedule H attaches to Form 1040, household employment taxes are one reason you may need to file even if you otherwise wouldn’t.
The wages you pay your nanny may also count toward the Child and Dependent Care Credit. Under 2026 tax law changes, it’s worth 20%–50% of up to $3,000 in expenses for one dependent, or up to $6,000 for two or more.
Sources
- IRS, Publication 926 (2026), Household Employer’s Tax Guide
- IRS, Topic No. 756, Employment Taxes for Household Employees
- IRS, Topic No. 602, Child and Dependent Care Credit
- IRS, Working Families Tax Cuts
- IRS, About Schedule H (Form 1040)
- IRS, About Form 1040-ES
- IRS, Get an Employer Identification Number
