Am I a Household Employer?

Hiring someone to help care for your children, tend your garden, clean your house, or support an aging parent can be a game-changer for your household. But did you know that in the eyes of the IRS, this could also make you a household employer with important tax responsibilities?

According to the U.S. Census Bureau, about 2.2 million people in the United States work in private homes, providing valuable services that keep households running smoothly.  

More than 600,000 of these domestic workers are directly employed by private households, 90% in childcare, personal care, or housekeeping roles, according to the U.S. Department of Labor.

If you’re paying one of these workers directly, chances are you may be considered their employer.

Understanding what being a household employer means, and what it requires, can help you stay in line with tax laws, protect yourself and your employee, and keep your home running without stressful surprises.  

Let’s break down what you need to know.

What is a Household Employer?

A household employer is an individual who hires and directly pays someone to work in or around their home. This arrangement is common for families who need help with childcare, cleaning, gardening, or caring for an elderly or disabled family member.

One key point to determining whether you're a household employer is how the work is done: Household employees typically perform their duties under your direction, in your home, using your equipment or tools.  

Definition and Importance

This is how the IRS looks at household employment: A household worker is considered your employee if you control not only the work they do, but how they do it. This means you set their schedule, outline their duties, and provide direction on how those tasks should be completed.

For example, if you hire a nanny to care for your children, you might set their working hours, specify which activities to do with the kids, and establish routines for meals, naps, and homework. Because you’re directing both the tasks and the methods, the nanny could be considered your household employee.

This is different from engaging an independent contractor, such as a self-employed gardener who brings their own tools, decides how and when to complete the work, and may even send someone else in their place. It’s also different from using a home caregiver through an agency, where the agency is the employer.

Understanding this definition is important because once you’re a household employer, you’re responsible for payroll and employment taxes commonly referred to as the "nanny tax," along with other federal and state obligations.

Types of Household Employees

Household employees come in many forms, but they all share one thing in common: they work in or around your home under your direction. Some household employees nurture your children, others care for loved ones, and still others keep your home and yard looking their best.

Some examples could include:

• Nanny: Provides full or part-time childcare in your home, focusing on the safety, well-being, and development of your children. A nanny can take responsibility for nearly all aspects of childcare, from preparing meals and organizing activities to helping with homework, planning outings, and managing children’s schedules. Many may also handle related household tasks, such as doing the children’s laundry or tidying play areas.

• Gardener: Maintains your home’s outdoor spaces, including lawns, gardens, and landscaped areas. Duties could include planting and pruning, mowing, weeding, watering, and seasonal upkeep. A skilled gardener can also make recommendations for plants that thrive in your climate and help design outdoor spaces that fit your family’s needs.

• Home caregiver: Assists elderly or disabled family members with daily living activities, such as bathing, dressing, meal preparation, and medication reminders. Beyond physical care, home caregivers often provide companionship and emotional support.

• Housekeeper: Manages cleaning and organizational tasks to keep your home comfortable, tidy, and efficient. This may include dusting, vacuuming, laundry, changing linens, washing dishes, and organizing household items. Some housekeepers also handle grocery shopping, errands, and other duties agreed upon in advance.

Identifying Your Status as a Household Employer

Not every person you engage to help at your home will be considered your employee. The difference comes down to the details of your working relationship. Getting that classification wrong can lead to unexpected taxes, penalties, or other legal issues.  

By taking time to familiarize yourself with a few key distinctions, you can determine whether you’re truly a household employer and take the right steps from the start.

Household Employee vs. Independent Contractor

A variety of requirements may need to be considered to determine whether a worker is an employee or an independent contractor.  

However, generally speaking, a household employee works under your direction: You decide what work is done, how it’s done, and often when it’s done.

In contrast, an independent contractor generally controls how they complete the work, provides their own tools and materials, and may work for multiple clients.  

Assessing Your Relationship with Household Help

When in doubt, look at the degree of control you have. If the person works in your home, uses your supplies, follows your instructions, and has a regular schedule you set, they’re likely your employee.

Think of it this way: if you can step in and say, “Please change how you’re doing that” and expect them to follow your direction, it may indicate an employer–employee relationship.  

On the other hand, if they determine the methods, timing, and materials without your input, they’re more likely to be an independent contractor.

Signs You’re a Household Employer

Certain patterns can point to a household employer relationship:

• You determine the work and direct how it’s done: You decide the specific tasks to be completed and give direction on the methods, routines, or processes your worker should follow.

• Regular payment schedule: Employees are typically paid weekly, biweekly, or monthly, not per project.

• Consistent work hours: You set their start and end times or at least expect your worker to be available at specific times.

• Ongoing role: The work is not a one-time or short-term project; it’s an ongoing arrangement that’s part of your household routine.

If these factors describe your situation, you’re most likely a household employer, and that means you may have payroll and tax responsibilities to manage.

Legal and Tax Responsibilities

Once you’ve determined that you’re a household employer, the next step is understanding your obligations under the law. These include paying employment taxes, meeting state-specific requirements, workers’ compensation, and keeping accurate records.  

Understanding Nanny Taxes

As a household employer, you are responsible for nanny taxes. If you pay your nanny above a specific annual threshold ($2,800 or more in 2025), you must withhold Social Security and Medicare taxes (also known as FICA) from their paycheck and report the wages to the IRS.

You’ll also need to set up a payroll schedule and follow it.  

If you pay your nanny $1,000 or more in a calendar quarter, you must pay the federal unemployment tax (FUTA) and may also owe state unemployment taxes.

Employer Identification Number (EIN) for Household Employers

If you're a household employer, you’ll need an Employer Identification Number (EIN). This is a unique number the IRS uses to identify you as an employer. You’ll use it when filing tax returns and paying employment taxes.  

The good news is that getting an EIN is free, and you can often apply online in just a few minutes through the IRS website.

State-specific Tax Requirements and Obligations

In addition to federal unemployment tax (FUTA), you may also need to pay state income tax and state unemployment taxes.  

Because rules and rates vary by state, and not all states have both taxes, it’s important to check your state’s requirements.  

Your state’s labor or employment department website is the best place to find up-to-date information, and your personal financial advisor or tax planner can also offer helpful insight.

Steps for Household Employer Registration

In many states, household employers must register with a state agency before paying wages.  

This often means signing up with your state’s labor or workforce department and providing basic information about your household employee. In some cases, you may also need to obtain state-specific identification numbers.

Registering with the state also benefits your household employees. It gives them access to unemployment benefits (if ever needed) and helps them build a verifiable work history, which can be valuable when applying for loans, leases, or future jobs.

State registration is often the first step toward setting up proper withholding and payment of state taxes. It can also make generating year-end forms, such as the W-2 (Wage and Tax Statement) and Schedule H (Household Employment Taxes), much easier.

You can start by visiting your state’s tax agency or labor department website to check the registration requirements.  

Nanny and household payroll service from SurePayroll® By Paychex includes state registration assistance.  

If you need personalized advice, it’s best to consult your financial advisor.

Keeping Records and Documentation

It’s important to keep clear, organized records of wages, taxes withheld, and other relevant documents. Good recordkeeping not only makes tax filing easier but can also help protect you in case of an audit or dispute.

Understanding Employment Laws

Following employment requirements, including rules on minimum wage and overtime, helps create a fair, positive work environment for your employee. It can also mitigate the risk of fines and penalties you might face as an employer.  

You can find current federal guidelines on the U.S. Department of Labor website and check the labor department site for the state and localities where your employees work for additional rules.

Managing Payroll as a Household Employer

Hiring someone to work in your home comes with responsibilities that go beyond the day-to-day management of your employee. You now have household employer payroll tasks like calculating and withholding taxes, providing pay stubs, and making payments on time.  

Calculation and Withholding of Taxes

As a household employer, part of managing payroll is calculating, withholding, and reporting the taxes owed on your employee’s wages. These payments go to federal, state, and sometimes local agencies.

Each time you run payroll, you’re responsible for sending the appropriate taxes to the right agencies. Some taxes, FICA, are split between you and your employee, while others, such as FUTA and state unemployment tax (SUI), are typically paid only by the employer. Local taxes may also apply, depending on where you live.

In addition to payroll taxes, you may also need to handle other deductions or contributions, such as workers’ compensation insurance or health insurance premiums. These taxes and expenses can affect your overall costs, and paying them accurately is required by law. For a closer look at how payroll taxes work, see Payroll Tax: What It Is and How to Calculate It.

Providing Pay Stubs and Timely Payments

Part of building trust with your employee is being transparent about their pay. Providing a pay stub each pay period, in addition to being required in most states, lets them see details like gross wages, taxes withheld, and net pay. It’s also a good record for both you and your employee if questions ever come up later.

Just as important is paying on time. A consistent payroll schedule helps you meet wage payment requirements and maintain a positive working relationship.

Year-End Tax Forms  

As an employer, you are also responsible for completing and filing year-end tax forms, including:  

Form W-2, Wage and Tax Statement, is the form that every employer who pays employees a specified amount determined by the IRS must file. It indicates how much income, Social Security, and Medicare tax was withheld for the year.  

As the employer, you must provide a form to your employee and the Social Security Administration. You should also keep a copy for your records.  

Schedule H, Household Employment Taxes, is part of IRS Form 1040, U.S. Individual Tax Return. Household employers use it to report and pay employment taxes for household employees. These taxes include Social Security, Medicare, and federal unemployment taxes (FUTA).  

Your Schedule H must be attached to your Form 1040 when you file your annual tax return. Be sure to keep copies of all forms and documentation for your records.  

Filing Schedule H is critical for compliance with federal tax laws. It helps ensure household employees receive proper credit for Social Security and Medicare, which are important for their future benefits. It also helps household employers avoid potential penalties for not reporting employment taxes.  

A signature-ready Schedule H and W-2s are included in the SurePayroll nanny and household payroll service.  

Using Payroll Services vs. DIY Management

Some household employers choose to handle payroll themselves, while others prefer to use payroll software.  

Doing payroll yourself might save money up front, but it also means taking on the responsibility of calculating taxes, making payments on time, submitting reports, and keeping up with changes to tax laws.

Payroll software can help take care of many of those tasks for you. This can help save you time and reduce the risk of errors. It’s worth comparing the cost, convenience, and peace of mind a service provides to the time and effort required for a do-it-yourself approach.

SurePayroll® By Paychex can help you care for the people who support your household. Our payroll services calculate and pay the necessary taxes and file the appropriate deductions for Social Security, Medicare, unemployment, and state taxes.  

Benefits of Being a Household Employer

Managing payroll and following employment rules takes some work, but the rewards can be well worth it. The right household employee can give you time in your schedule and become a trusted part of your home life.

Personalized Care for Your Family

Hiring a household employee means your family receives care that’s tailored to your specific needs, routines, and preferences. This might include having meals prepared the way you like them, knowing your children’s schedules are on track, or watching a parent develop a strong bond with their caregiver.

Flexibility and Work-Life Balance

With the right support at home, you can take more control over your time. A household employee can handle daily responsibilities that free you up for work, family activities, or a bit of breathing room. That, in turn, can help you create a better balance between professional demands and personal life.

Building Long-Term Relationships with Employees

A long-term relationship with a household employee offers stability and peace of mind. You can feel confident your loved ones are cared for by someone who knows their needs and routines inside and out and can be trusted to handle day-to-day tasks without constant oversight.  

For the employee, staying with one family allows them to grow in the role and take pride in providing consistent, high-quality care.

Getting Expert Guidance

Navigating household employment taxes and payroll rules can be tricky, and sometimes it’s worth bringing in an expert. The right professional can help you understand your responsibilities and steer clear of costly mistakes.

When to Consult a Tax Professional

If you’re not sure what’s required of you as a household employer, it could be time to call in a pro. A tax expert can walk you through your specific situation, explain the rules in plain language, and help you sidestep expensive missteps.

Preparing for a Consultation

A little prep work can make your meeting with a tax professional more productive. Bring along relevant documents like employment records, payment histories, and tax forms so they have the full picture from the start.

Finding the Right Expert

Not all tax professionals are the same. Look for someone with experience in household employment taxes and a track record of reliable, accurate guidance. A good fit will not only answer your questions but give you confidence moving forward.

Conclusion

Figuring out if you’re a household employer is an important first step in meeting your responsibilities. Once you know, keeping good records and staying on top of your obligations will make things much easier in the long run.

How SurePayroll Can Help

SurePayroll makes it simple to pay your nanny correctly and easily, while helping you navigate some of the complicated tasks involved in household payroll, including:  

• Handling state registration when you sign up as a new household employer  

• Calculating and filing payroll taxes at the state and federal level  

• Providing direct deposit, pay stubs, and year-end W-2s  

• Offering live and online support for household-specific payroll questions  

At SurePayroll, we can help guide you through setup and handle the back-end work—so you can focus on your family, not the forms.  

Ready to Make Payroll Easier?

If you’d rather not go it alone, SurePayroll is here to help.  

Learn more about our household payroll services and how we can help with registration, taxes, and more.  

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