If you pay a nanny, housekeeper, caregiver, private nurse or other household worker, you may be a household employer. That means you have tax duties even though the worker is in your home and you are not running a business. The rules are simpler than business payroll: most households report the taxes on their own personal tax return using Schedule H. This guide explains who counts, the 2026 thresholds and the common traps.
Who is a household employee
The IRS says a household employee works in or around your home and you control what work is done and how it is done. A worker who controls how the work is done is self-employed, not your employee. For example, a worker sent by an agency that controls the work is generally not your employee, and a person who provides childcare in their own home generally is not either.
Pay to some family members does not count. For Social Security and Medicare, the exclusions are wages you pay to your spouse, your child under 21, your parent in most cases, and an employee under 18, unless household work is the employee's principal occupation. Students under 18 generally do not meet that exception. For FUTA, the exclusions are your spouse, your child under 21 and your parent.
If you are unsure whether someone is an employee, use the same approach as any business. See employee vs. independent contractor.
2026 thresholds and rates
| Tax | Test | Rate |
|---|---|---|
| Social Security and Medicare | Cash wages of $3,000 or more in 2026 to any one household employee | 6.2% Social Security and 1.45% Medicare each for employer and employee, 7.65% each |
| FUTA | Cash wages of $1,000 or more in any calendar quarter of 2025 or 2026 | 6% on the first $7,000 per employee, with the usual state credit |
| Federal income tax | Not required | Withhold only if the worker asks and you agree, using a Form W-4 |
The 2026 Social Security wage base is $184,500, which is rarely reached by household pay. There is no wage cap for Medicare.
Example. A family pays a nanny $400 a week for 52 weeks in 2026, or $20,800. That is more than $3,000, so Social Security and Medicare apply. Combined tax at 15.3% is about $3,182. If the family withholds the nanny's 7.65% share ($1,591) from her pay, it also pays an employer share of the same amount. Quarterly pay is $5,200, which exceeds $1,000, so FUTA applies too, on the first $7,000. State unemployment tax may also apply.
How to report and pay
- Schedule H. File Schedule H (Form 1040) with your 2026 federal return, due April 15, 2027. If you are not required to file a return, you file Schedule H by itself.
- Pay the tax. You can pay the amount due with your return, or avoid a large balance by increasing your own paycheck withholding or making estimated tax payments. 2026 estimated payments are due April 15, June 15 and September 15, 2026, and January 15, 2027.
- Form W-2. You must give the worker a Form W-2 if you pay $3,000 or more in Social Security and Medicare wages, or if you withhold federal income tax. Employee copies and the SSA copy with Form W-3 are due by February 1, 2027. See W-2 and W-3 filing.
Ask for the worker's Social Security number no later than the first payday, and enter the name and number exactly as shown on the card.
Other obligations
- Form I-9. Household employers must complete Form I-9 for a regular hire. You keep it in your own records and do not send it to the IRS, USCIS or anyone else. See Form I-9 and E-Verify.
- Records. Keep employment tax records for at least 4 years after the return's due date or the date the tax was paid, whichever is later.
- State rules. Check your state unemployment tax agency, and ask about state withholding and workers' compensation insurance. See workers' compensation basics and new hire reporting.
- Child care credit. Paying a nanny correctly is related to claiming the federal credit for child and dependent care expenses, a separate topic that we can review on your personal return. See individual tax preparation.
Common mistakes
- Paying a household worker in cash without reporting.
- Treating a nanny as a contractor because she is paid by the hour or uses her own transportation.
- Waiting until April to learn how much tax is due and then facing an unexpected bill.
- Not collecting the Social Security number up front.
- Skipping the state unemployment or workers' compensation requirements.
- Assuming an agency arrangement removes all duties without confirming who controls the work.
How we can help
We determine whether you have a household employee, set up the paperwork, prepare Schedule H and Form W-2 and adjust estimated payments or withholding. We can also run payroll if you prefer. See our individual tax preparation and payroll services. This is general information, not tax advice for your household.
Frequently asked questions
What is the nanny tax threshold in 2026?
If you pay any one household employee $3,000 or more in cash wages in 2026, you owe Social Security and Medicare tax. FUTA applies separately at $1,000 or more in a calendar quarter.
Do I have to withhold federal income tax from a nanny?
No. You withhold only if the worker asks and you agree, and the worker gives you a Form W-4.
Where do I report the nanny tax?
On Schedule H, filed with your Form 1040 by April 15, 2027 for 2026. You can also pay in during the year through estimated tax or extra withholding.
Do I need a W-2 for my nanny?
Yes, if you pay $3,000 or more in Social Security and Medicare wages or withhold federal income tax. The form is due to your employee and the SSA by February 1, 2027.
Official sources
- IRS: Publication 926 (2026), Household Employer's Tax Guide
- IRS: About Publication 926
- IRS: Publication 15 (Circular E), Employer's Tax Guide
This page is a plain-language summary. The official source controls if there is any difference.
General information only, not tax, legal or accounting advice for your situation. Rules, limits and deadlines change; confirm the current rules with the official source or a qualified professional before you act. Reading this page does not create a professional relationship with CPA Tax Payroll and Accounting Corp.