What is the Nanny Tax? Household Employment Taxes

Nanny Tax

Claudette Zolkowski

October 28, 2026

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5 min read

The nanny tax is the common name for the federal and state employment taxes that can apply when you pay someone to work in or around your home as your employee. The nanny tax commonly includes Social Security and Medicare taxes shared by you and your employee, plus employer-paid taxes such as federal unemployment tax. You generally withhold the employee's share from their pay and pay the employer taxes in addition to wages. Household employers generally report federal household employment taxes once a year on Schedule H with their personal tax return.

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When you pay someone to care for your children, look after a parent, or keep up your home, their wages may not be your only cost. The IRS calls these household employment taxes.

SurePayroll® By Paychex household payroll calculates payroll, files and deposits federal and state household payroll taxes, and prepares year-end forms.

Who counts as a household employee for the nanny tax?

The nanny tax can apply to anyone you hire to do household work, meaning work done in or around your home, as long as that person is your employee. IRS Publication 926, Household Employer's Tax Guide, lists examples that reach beyond nannies:

Care for children: nannies and babysitters
Care for an adult: caretakers, health aides, and private nurses
Work in and around your home: housekeepers, housecleaning workers, maids, cooks, domestic workers, drivers, yard workers, and butlers

Independent contractors you hire for a job, such as a plumber or a repair person, generally aren't your household employees, according to IRS Topic No. 756, Employment Taxes for Household Employees. Whether someone is your household employee depends on the working relationship, not just the type of work they perform. Learn more in Am I a Household Employer?

Taxes included in the nanny tax and who pays each one

You withhold some nanny taxes from your employee's pay, while others are employer taxes you pay in addition to their wages.

Nanny tax components and who pays them
Tax	Withheld from your employee's pay	Paid by you in addition to wages
Social Security and Medicare (FICA)	Generally, the employee's share	Generally, the employer's share
Federal unemployment tax (FUTA)	None	All of it
Federal income tax	Only if your employee asks and you agree	None
State taxes	Varies by state	Varies by state

State unemployment tax and state income tax withholding requirements vary by state. Check the requirements where you live.

Nanny Unemployment Tax: FUTA Rules for Household Employers explains federal and state unemployment taxes.

For more about withholding taxes from an employee's pay, see How to Pay a Nanny.

When nanny tax requirements apply

Different nanny tax requirements apply at different wage levels and under different circumstances:

Social Security and Medicare taxes generally apply when the cash wages you pay one household employee during the year reach an annual IRS threshold. See Nanny Tax Threshold for the updated threshold.
FUTA generally applies when the cash wages you pay household employees in any calendar quarter of the current or prior year reach a separate quarterly threshold.
Federal income tax withholding is generally optional and applies when your employee asks you to withhold it and you agree.
State unemployment and income tax withholding requirements vary by state.

How household employment taxes are reported

You generally report federal household employment taxes once a year on Schedule H (Form 1040), Household Employment Taxes, filed with your personal income tax return. State employment taxes follow your state's own reporting rules. Schedule H: What Household Employers Need to Know walks through the form.

You may also need to give your employee a Form W-2, Wage and Tax Statement, and file wage information with the Social Security Administration. You'll include your employer identification number (EIN) on the forms you file for your household employee.

Reporting and paying these taxes is important because unpaid household employment taxes can result in back taxes and penalties. The Risks of Not Paying the Nanny Tax explains what's at stake.

Household payroll with SurePayroll

With SurePayroll household payroll, you can pay your household employee while SurePayroll calculates, files, and deposits federal and state household payroll taxes. SurePayroll also prepares year-end forms and provides a signature-ready Schedule H to file with your return. ‍

Explore household payroll

Related terms

This content is for educational purposes only, is not intended to provide specific legal advice, and should not be used as a substitute for the legal advice of a qualified attorney or other professional. The information may not reflect the most current legal developments, may be changed without notice and is not guaranteed to be complete, correct, or up to date

Related Terms

Payroll Run

Self-Employment Tax

Off-Cycle Payroll

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Frequently Asked Questions

Is nanny tax an official IRS term?

The IRS calls these taxes household employment taxes. Nanny tax is the common name, and it covers more household workers than nannies. Household employers generally report the federal taxes on Schedule H.

Does the nanny tax apply to a caregiver for an elderly parent?

The nanny tax can apply when you employ someone to provide care for an elderly parent in or around a private home. IRS examples of household workers include caretakers, health aides, and private nurses. Am I a Household Employer? explains how to determine whether the caregiver is your household employee.

Does the nanny tax apply to a worker from an agency?

It depends on who employs the worker. If an agency provides the worker and controls what work is done and how it is done, the worker generally isn't your household employee.

Do I have to withhold federal income tax from a household employee's pay?

You aren't required to withhold federal income tax from a household employee's wages. You withhold it only if your employee asks you to and you agree.

Is federal unemployment tax part of the nanny tax?

Federal unemployment tax, or FUTA, can be part of the nanny tax. As the employer, you pay the tax without withholding it from your employee's wages. FUTA generally applies when the total cash wages you pay household employees in any calendar quarter of the current or prior year reach the quarterly threshold. Nanny Unemployment Tax: FUTA Rules for Household Employers has the details.

When do I file Schedule H?

If you owe federal household employment taxes, you generally file Schedule H with your annual federal income tax return. Schedule H: What Household Employers Need to Know walks through what goes on the form.

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