Knowledge Center

Nanny Tax FAQ

• Am I required to offer my nanny benefits such as vacation time, sick time, or paid time off?

  US employers are not required to offer benefits such as paid vacation time, paid sick time, medical or life insurance, or retirement savings plans unless stipulated by state or local laws. However, employers with full-time, permanent staff find that offering some basic level of benefits keeps them competitive in the employment market, attracting and retaining […]

• How often do I need to pay or remit the “nanny taxes”?

  Many wonder how to pay nanny taxes and how often to file. Understand that the federal and state filing schedules are NOT synchronized. Additionally, not all states have the same reporting schedule. Federal Employment Taxes: Employers of domestic workers must, at a minimum, make annual payments for Social Security, Medicare and Withheld Income Tax (if […]

• I hired a nanny. What about household employers workers’ compensation and disability insurance?

  SUMMARY: State insurance regulations determine when household employers workers’ compensation and disability insurance are required. The rules vary by state. We recommend meeting with a licensed insurance broker to review all of your insurance needs when you become a household employer. HWS has a licensed insurance partner who will provide HWS clients a no obligation […]

• What may happen if I do not pay the nanny taxes?

  What happens if I don’t pay for my nanny taxes? Failure to report wages paid to a domestic service worker – including a nanny, senior caregiver, housekeeper and more – and failure to pay the nanny taxes compromises the validity of your personal income tax return. These taxes are included on your personal federal income […]

• Do I have to pay payroll taxes for the cleaning lady that comes weekly?

  Video: Cleaning Lady…Employee or Independent Contractor? https://youtu.be/qXV9870o5MM Is a regular cleaning lady subject to the nanny taxes? Is the cleaning lady or housekeeper a household employee? Any individual whom you employ to provide services in your home whom you pay directly AND whose total payments in the calendar year meets the IRS household employment threshold, […]

• Is a nanny bonus reported as wages?

  I gave our nanny a $2000 holiday bonus. Do I have to report the nanny bonus as wages, and will there be a tax on bonus payments? A nanny bonus payment IS considered taxable wages. “Wages” are defined by the IRS as all remuneration paid, including the cash value of all remuneration paid in any […]

• What about tracking the nanny’s hours? What is required?

  Fair Labor Standards Act (FLSA) states that due to the nature of their work and duties, nannies and other household workers are employees, are hourly workers,  and are covered by minimum wage and overtime laws. The FLSA requires employers to maintain accurate and complete contemporaneous time records for tracking hours worked by an employee. When […]

• How can I help my nanny build a retirement savings account?

  For 2026 the limits will be as follows.  SIMPLE IRA plans: Up to $17,000 (or $18,100 for small employers) Defined Contribution plans (like SEP IRAs): The lesser of 25% of compensation or $72,000 401(k), 403(b), and 457 plans: Up to $24,500 Catch-up contributions (age50+): Up to $8,000   There are some practical ways an employer […]

• How do I calculate overtime for my salaried nanny? What about compensation for occasional overnights?

  Most regular nannies are paid on a guaranteed pay basis. What this typically means is that the family agreed to pay the nanny a pre-determined salary for a given number of hours in a pay period. The full time nanny work schedule is often more than 40 hours per week. It is important to remember, […]

• My nanny wants net take home pay of $600 a week. What does that mean?

  Many household employees, including nannies, expect to negotiate a “net wage” or “net take home pay” agreement with their employer. The net take home pay agreement is a foreign concept for many nanny employers, and often the new employer does not fully understand the financial implications of a net pay agreement with the nanny or […]

• How frequently do I need to pay my household worker? My nanny wants to be paid weekly. Do I need to do that?

  The pay frequency of a nanny or senior caregiver (and all hourly, non-exempt employees) – the maximum interval between wage payments to the worker – is governed by state law. Nanny pay frequency regulations are summarized below. Payroll calculations for your household employee (nanny, housekeeper, maid, senior caregiver, etc.) are governed by the Fair Labor Standards Act. […]

• Are there tax breaks for dependent care? Does this apply when I hire an in-home caregiver?

  There are two popular strategies that families employing nannies or senior caregivers use to minimize their personal income taxes. Many families can utilize a flexible spending plan (cafeteria plan) offered by their employer for child and dependent care expenses. Your employer’s human resources department can provide you with plan details. Another strategy is the Child […]