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Toll Free 800-929-9213Talk to a GTM Household Employment Expert About Your Needs
Paying your household employee the right way and figuring out your tax obligations may be tricky. Especially for a family doing this for the first time. We’d like to make this easy for you with a free consultation.
Call (800) 929-9213 for a complimentary, no-obligation consultation with one of our household employment experts.
We will review your household hiring and help you determine:
- What is required to hire an employee like obtaining an EIN, filing new hire reports, and providing Form I-9 to your worker
- What to pay your worker to comply with minimum wage and overtime laws
- Your employee’s hourly wage when you have a salary in mind (household workers need to be paid by the hour and not a flat salary)
- The taxes that will come out of your worker’s paycheck
- Your employee’s take home (or net) pay (after taxes are withheld)
- Your tax obligations as an employer
- Other state-specific requirements like workers’ compensation and paid sick and family leave
We can also advise you on:
- Benefits of paying your employee legally
- Tax savings when using a Flexible Savings Account or Dependent Care Assistance Plan through your employer
- Employee benefits like health coverage
- Background checks
And we’ll answer any questions you have about hiring and employing someone to work in your home.
Experts are Available
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8:30 am – 8 pm (Eastern)
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Frequently Asked Questions
Explore answers to the most common questions household employers have about managing their responsibilities effectively.
What is the nanny tax?
Answer – The nanny tax refers to the employment taxes paid when a family or individual hires someone to work in their home. This is typically a nanny who looks after children but also includes in-home senior care workers, housekeepers, household managers, butlers, and drivers. Household employees and their employers pay Social Security and Medicare taxes on the worker’s wages. Employees also pay federal and state (if applicable) income taxes. Employers pay federal and state unemployment taxes. Essentially, for tax purposes, household employees are treated the same as traditional employees.
As a household employer, do I have to pay taxes on my employee?
Answer – Yes. As a household employer, you must withhold Social Security and Medicare taxes if you pay cash wages of $2,800 or more in 2025 (or $2,700 in 2024) to your employee. Employers are not required to withhold federal and state income taxes unless both parties agree upon it. If income taxes are not withheld throughout the year, your nanny will be responsible for paying them at the end of the year. If you pay a total of $1,000 or more per quarter to a household employee, you must pay federal unemployment tax. This does not apply if your household employee is your spouse, child under age 21, parent, or any employee under 18 at any time in the current tax year.
How much will I owe in nanny taxes?
Answer – You are responsible for paying 7.65 percent of your employee’s gross pay in Social Security and Medicare taxes, which you can remit quarterly. Your employee will be responsible for the same amount, which is required to be withheld from their pay each pay period. Each of you will pay 6.2 percent towards Social Security and 1.45 percent to Medicare. Your employee will also owe income tax.
You will also pay FUTA (federal unemployment tax), which is six percent of wages up to $7,000 in earnings as well as state unemployment taxes, which vary by state. Your employee is not responsible for unemployment taxes.
Can I file nanny taxes on my own?
Answer – The IRS estimates that it takes a household employer 60 hours each year to comply with all federal and state tax laws. It can get complicated and time-consuming. You’ll need to adhere to all applicable federal and state tax, labor, and wage laws like the Fair Labor Standards Act, paid sick and family leave programs, and domestic worker protection laws. Some household employers rely on their accountant or a firm like GTM Payroll Services to handle payroll processing and tax filings.
Before handling nanny taxes and payroll on your own, we suggest you visit The Complete Guide to Household Payroll. This guide will help you every step of the way and explain what you need to do and why. There’s even a handy checklist and payroll calendar at the end of the guide to use as references.
However you proceed, it’s important to do it the right way. There can be steep financial consequences if you fail to properly pay your nanny taxes.
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