What is the "nanny tax" and do I have to pay it?

The "nanny tax" is the shorthand term for the federal, state, and local employment taxes you must pay when hiring a household employee, such as a nanny, senior caregiver, housekeeper, or personal assistant.

Do I have to pay it?

If you pay a household employee $2,700 or more in a calendar year (or $1,000+ in a calendar quarter for state unemployment tax), federal law requires you to pay household employment taxes.

Paying the nanny tax involves:

• Social Security & Medicare (FICA): Withholding your employee's share and paying your matching employer share.

• Federal & State Unemployment Taxes (FUTA/SUTA): Employer-paid taxes that provide unemployment benefits.

• Year-End Reporting: Issuing a Form W-2 to your employee and filing Schedule H with your personal tax return.

Why it matters?

Paying legally protects you from substantial IRS penalties and back taxes, while giving your employee essential benefits like Social Security credits, verifiable income, and unemployment coverage.

Through our partnership with HomePay®, we automate this entire process—handling calculations, withholdings, and tax filings so you stay 100% compliant effortlessly.

What documents will I need to get started? 

You will need EIN/SSN, employee tax forms, bank account details.

How does billing work and what does it cost?

Your subscription starts with your first month free. 

• $75/month (covers your primary household employee, automated payroll, and ongoing tax filings).

• Additional Staff: $28/month for each additional household employee.

• Year-End Taxes: A single $100 annual fee covers your employee's Form W-2 preparation and Schedule H filings for your personal tax return.