What kinds of household workers are covered by nanny tax rules?

Household workers include anyone who works in or around your home such as babysitters, nannies, health aides, private nurses, maids, caretakers, yard workers, and similar domestic workers. The worker must be your employee, meaning you control what work is done and how it is done. If the worker controls how the work is done, they are self-employed.

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What must I do if I think my worker or worker-to-be isn't a U.S. citizen?

It is unlawful to knowingly hire someone who cannot legally work in the U.S. Your household employee must complete Form I-9, Employment Eligibility Verification. You must verify eligibility and keep the completed form for your records.

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What are my tax duties if I have a household employee?

  • Withhold and pay Social Security and Medicare taxes if you pay $2,800 or more in 2025 ($2,700 in 2024) to any one employee.
  • Pay unemployment tax if you pay $1,000 or more in any calendar quarter during the current or prior year.

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If I hire teenagers as babysitters or for yard work, must I withhold and pay tax for them?

Wages paid to employees under age 18 are generally not counted toward the $2,800 threshold unless providing household services is their principal occupation.

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Are there ways to pay my household employee that minimize the employment tax?

Non-cash benefits such as food, lodging, clothing, and up to $325/month (2025) for commuting or parking reimbursements are not counted as wages for employment tax purposes.

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I'm not sure yet whether I'll pay enough this year to require withholding. What should I do?

If you expect to pay Social Security and Medicare wages of $2,800 or more in 2025 ($2,700 in 2024), withhold taxes. If you pay less, repay the employee.

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Okay, I've withheld tax on the employee and I owe the employer's share. How do I pay these amounts?

Pay withheld taxes as part of your regular income tax obligation. Correct any under- or over-withholding in later payments or by repaying the employee.

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Do I have to reduce the worker's take-home pay by the tax on that pay?

You may pay Social Security and Medicare taxes from your own funds. If you do, include them in the employee's wages for income tax purposes, but not for Social Security, Medicare, or FUTA calculations.

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In what cases do I owe unemployment tax?

Pay FUTA tax if you pay $1,000 or more to household employees in a calendar quarter. FUTA tax is paid from your own funds, not withheld from the employee.

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Do I need to withhold federal income tax?

Withhold only if the employee requests it via Form W-4. Do not count meals, lodging, or certain commuting reimbursements as wages. Taxes you pay on the employee’s behalf are included in wages for federal income tax purposes.

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What about Earned Income Credit (EIC)? What must I do?

Notify employees about EIC if you withhold federal income tax or if their wages are below $68,675 in 2025. Form W-2 Copy B includes EIC information.

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What federal tax forms must I file if I have a household employee?

  • File Form W-2 for each employee receiving Social Security, Medicare, or federal income tax withholding.
  • Submit Form W-3 to the SSA along with Copy A of W-2 by January 31.
  • Use Schedule H (Form 1040) to report employment taxes. File with your return or alone if not required to file.

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