It’s Tax Time — and I Have a Nanny. What Do I Need to Do?
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When you employ a nanny, tax season works a little differently — and if this is your first time navigating it, it may not be immediately obvious what your role is or which forms matter. Many families are surprised to learn there’s a specific process for household employers, but once you understand the essentials, it becomes much more approachable.
The good news? You don’t have to figure it out from scratch. Here’s a straightforward guide to everything families need to know at tax time when they employ a nanny, written to make the process feel a whole lot less overwhelming.
First Things First: Are You a Household Employer?
Before thinking about forms or filings, it’s important to confirm your role.
You are considered a household employer if:
A caregiver works in your home, and
You control what work is done and how it's done.
Once this is true:
They must be treated as a W-2 employee (not a 1099 contractor)
Federal taxes may apply once you pay $2,800 or more in a year or $1,000 or more in any calendar quarter (These are 2025 thresholds, these numbers have increased in 2026)
In nearly all nanny arrangements, the nanny is an employee, not a contractor — meaning families must follow W-2 employee tax rules.
If this is new information, you're in very good company. Most families only learn this once they begin hiring help.
What You’re Responsible for at Tax Time
If you fall under the category of a household employer, there will be a few things you’re responsible for when it’s time to file your taxes.
Families must:
Provide a W-2 to their nanny
File W-2 + W-3 with the Social Security Administration
File Schedule H with their personal tax return (if required)
Report all wages paid during the year
Ensure employee details (name, SSN, address) are accurate
Keep payroll records organized for their own tax filing
These are the core requirements that wrap up your year as a household employer. Depending on the state that you live in, you may have additional requirements.
What Your Nanny Needs From You
Your nanny relies on you for accurate year-end documentation. This helps them:
File their own taxes correctly
Confirm Social Security and Medicare contributions
Provide documented income that may support rental, financing and financial aid applications
Maintain accurate employment records
This is a great time to double-check that the information on file for your nanny — their legal name, Social Security Number, and mailing address — is accurate. These pieces are what make year-end forms run smoothly.
Taxes You May Owe as a Household Employer
Here’s a quick breakdown of the taxes involved in nanny employment:
You may owe:
FICA taxes (Social Security + Medicare)
Both employer and employee portions
FUTA (Federal Unemployment Tax)
If wage thresholds apply
SUI - State unemployment insurance
Required for household employers in many states
What about income tax withholding?
Withholding federal income tax isn’t required, but it can help your nanny avoid owing a large amount when they file taxes. If you both agree, your nanny fills out a W-4, and you withhold the amount the IRS calculates — just like any traditional job.
If You Started Paying Your Nanny Mid-Year
This is one of the most common tax-time questions.
Even if you started using payroll software midway through the year, all wages paid throughout the year must be reported.
If your nanny worked for you earlier in the year and you paid them on your own (whether by cash, check, or apps like Venmo/Zelle), those wages still need to be reported. You’ll include the total amount paid for the year on your nanny’s W-2 and on your Schedule H when you file your taxes.
Families should gather:
Any pay records from before payroll setup
Dates and amounts paid
Any taxes previously withheld (if applicable)
If your records aren’t perfect, don’t panic — many families start the year informally and get organized at tax time. You can rebuild accurate totals from what you do have.
Common Questions Families Ask at Tax Time
Here are a few of the most frequent questions we hear:
Do I still need Schedule H if my payroll service handles the W-2?
Possibly. Schedule H attaches to your personal tax return and reports household employment taxes. Whether you need it depends on how your payroll service files and what applies to you.
What if I accidentally paid my nanny as a contractor earlier this year?
The IRS considers most nannies employees, not contractors. Families may need to correct earlier payments to stay compliant.
What if I didn’t withhold taxes during the year?
You can still report wages and employer taxes at year-end. Your nanny may owe their portion when filing their own return.
What if I didn’t keep good records?
Start with what you do know. Pay schedules, bank transfers, Venmo payments, and text confirmations can all help rebuild accurate wage records.
How Payroll Services Like Poppins Can Help
While some families prefer a DIY approach, others choose a payroll service to do the heavy lifting when it comes to taxes.
Calculating and withholding taxes
Filing federal, state, and local payroll taxes (where possible)
Preparing W-2s and Schedule H
Storing all records securely for tax time
Providing ongoing support for questions throughout the year
This can make the process smoother and help families feel more prepared heading into tax season.
Where Families Go From Here
If this is your first year handling taxes with a nanny, give yourself grace — you’re learning something completely new. Once you understand the core steps, it becomes far more approachable.
Whether you choose to handle payroll yourself or get support, you’re taking the right steps to care for your nanny, protect your household, and stay organized for the year ahead.
Learn more about why we choose Poppins Payroll
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