Knowledge Center

Nanny Tax FAQ

• I have heard that I may qualify for childcare related personal income tax breaks? Does this apply when I hire a nanny?

  When you hire a nanny you may qualify for a childcare related personal income tax breaks. There are two popular strategies that families with child care expenses use to minimize their personal income taxes and are in addition to the Child Tax Credit, which in 2025 rose to $2,200 per child and is available to […]

• What is New Hire Reporting? I just hired a nanny.

  What is new hire reporting exactly? The Personal Responsibility and Work Opportunity Act of 1996 requires that all employers file a new hire report on all newly hired workers and re-hired workers within a specified period, generally 2 weeks, or incur a financial penalty. Each state has designated an agency responsible for the collection of […]

• We are hiring a live-in nanny. How do you figure her room and board for tax purposes?

  In general, the Internal Revenue Service (see §119(a)) allows you to exclude from income the value of meals and lodging furnished by the employer when hiring a live-in nanny or household worker (nanny room and board), provided the following conditions are met: Meals and lodging (room and board) must be furnished on the business premises […]

• Do I need a nanny contract or work agreement?

  A nanny contract or work agreement is not legally required under Federal law, but you SHOULD take the time to write one up anyway. It is a best practice that protects the family and provides a point of reference to both parties when there are questions or misunderstandings. A written nanny work agreement helps the […]

• How do we handle nanny share payroll taxes with another family?

  When you share a nanny with another family, both families become employers. Presuming that you each pay the nanny for the work performed for your individual family, each employer is responsible for withholding nanny share payroll taxes and the periodic remittances of payroll taxes. Nanny share payroll taxes can be confusing, especially if you are […]

• What are my tax responsibilities with a temporary nanny? She only worked for us for six weeks while my wife was on bed rest.

  Many families hire temporary nannies or other temporary household workers and have many questions about their financial and legal responsibilities. Examples include the temporary nanny who is working while the mother is on bed rest, the respite senior caregiver staying with an aged family member while you are away for work or vacation, or the […]

• Do I need to hire a U.S. citizen to be our nanny or dad’s caregiver?

  SUMMARY: You may legally hire a U.S. citizen, an alien lawfully admitted for permanent residence, or an alien with a valid work permit. You are required to verify your candidate’s employment eligibility using » Form I-9. Aliens with a valid work permit are eligible for and should have a valid Social Security Number. It is […]

• My nanny or caregiver is not a legal resident. What should I do about employment taxes for undocumented nanny?

  The Internal Revenue Code maintains that the immigration status of your nanny or other employee has no bearing on your obligation for nanny employment taxes. Immigration enforcement is focused on penalizing the EMPLOYERS – particularly prosecution for employment tax fraud. Employing an undocumented worker is a violation of immigration law. Failure to pay employment taxes […]

• Can I hire a nanny who has a F-1 (J-1) Student Visa. Are there special rules?

  SUMMARY: Since 1994, off campus work (including work in a private home as a nanny, SENIOR CAREGIVER, housekeeper, maid or other domestic work) is generally prohibited for J-1 or F-1 student visa holders. HomeWork Solutions’ clients may choose to hire a foreign nanny and have their employment eligibility verified using the DHS e-Verify program, also […]

• Our former nanny applied for unemployment benefits? Will she get them?

  The working arrangement between a nanny and the family is considered employment at-will under US common law unless the written work agreement specifies a term of contract (which is a horrible idea). In broad terms, at-will employment means that employment is presumed to be voluntary and indefinite for both employees and employers. A nanny under […]

• What is a wage garnishment order?

  Most of our nanny and senior care employers are unfamiliar with wage garnishment orders and the implications and responsibilities they have in relation to the order. A wage garnishment order is a court order which requires that some portion of an employee’s earnings be withheld by the employer for the payment of a debt. Most […]

• What do I do with the Wage and Benefit Audit form I received?

  States use a Wage and Benefit audit for many purposes. The state may be checking on taxpayer subsidized benefits that the worker is receiving such as Medicaid for a dependent child, or on the veracity of information the employee has previously provided for purposes of child support enforcement, wage garnishment for tax delinquencies, etc. The state will […]