Nanny Payroll in Pittsburgh:
A Simple Guide for Busy Parents
When I first started exploring childcare options for my daughter as my maternity leave was wrapping up, I assumed the hard part would be choosing the right caregiver — someone who felt safe, trustworthy, and who cared for my daughter the way I would.
And while that deeply mattered, what surprised me was how many questions came after we found the perfect nanny:
“Do I need payroll for a nanny?”
“Am I technically an employer?”
“How do taxes even work for this?”
If you’re in that same spot — welcome. You’re not alone, and we can walk through this together. Let’s start by answering some of the main questions.
Are you a household employer?
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, this number may increase in 2026)
What are your basic responsibilities as a household employer?
You issue a W-2 (not a 1099) to your employee
You’re responsible for withholding and paying payroll taxes
You must report wages to the IRS and the state
You must file a Schedule H at the end of the year with your personal taxes
The good news?
Becoming a household employer is much more manageable than you might expect once you know the basics.
Why does paying ‘over-the-table’ matter?
Paying legally doesn’t just protect your family — it protects your nanny, too.
Employers who pay legally can:
Access tax benefits
Stay compliant with IRS and Pennsylvania laws
Avoid penalties that may come with unreported wages
Offer their nanny documented income that can support financial stability
Be protected if their employee gets injured on the job ( subject to state workers’ compensation requirements)
Nannies benefit from:
Paystubs and verifiable income
Social Security and Medicare credits through reported wages
Eligibility for unemployment benefits, when applicable under state law
Documented income that may support housing applications, loans, and other long-term financial planning
In short, legal pay helps create transparency and trust on both sides — creating a stronger, more stable working relationship.
PAYROLL BASICS FOR PITTSBURGH FAMILIES
1. You’ll need to register as an employer
As a household employer, you’re responsible for a few key steps when you hire a nanny:
Get an EIN (your Federal Employer Identification Number)
Register with the Pennsylvania Department of Labor and Industry and the Pennsylvania Department of Revenue
Set up applicable employment taxes, including Social Security and Medicare, and Pennsylvania income tax withholding. Federal income tax withholding is optional unless you and your employee agree to withhold it.
Report your new hire to Pennsylvania Department of Labor within 15 days
These steps make sure wages are tracked, taxes are handled correctly, and help you stay compliant from day one.
2. Taxes household employers handle
Here’s a list of the taxes that need to be withheld from each paycheck and administered correctly:
Federal taxes
FICA (Social Security & Medicare) — shared by employer and employee
FUTA (federal unemployment) — employer paid
State taxes
PA state income tax (withheld from employee)
PA state unemployment insurance (SUI) — employer contribution
PA employee unemployment contribution (0.07% in recent years)
Local taxes
Earned Income Tax (EIT) — based on the employee’s residence (the higher rate per PSD code)
Local Services Tax (LST) — applies in some municipalities
Exact rates for local taxes depend on PSD codes.
3. Overtime and minimum wage
In Pennsylvania, nannies are considered non-exempt workers, which means:
Minimum wage: $7.25/hour
Overtime: 1.5× the hourly rate after 40 hours/week
A salary cannot replace overtime, household employees must be paid hourly
Live-in nannies do not get overtime (federal rule)
Guaranteed hours, schedule expectations, and pay structure should all be included in a written agreement.
LOCAL NOTES FOR PITTSBURGH FAMILIES
Paying a nanny in Pittsburgh comes with a few hometown specifics:
Local earned income tax (EIT)
Most Pittsburgh households fall between 1–3%, depending on municipality and school district.
Local Services Tax (LST)
If your nanny works in a municipality that requires LST, you’ll withhold it in small amounts from their pay – $52/year, paid in even parts over 4 quarters.
Workers' compensation
Most household employers in Pennsylvania are required to carry workers’ compensation insurance for their nanny. The exact rules can vary slightly based on where you live and your insurance provider’s policies, so the state recommends confirming your coverage requirements directly with your insurer.
In most cases, if a nanny works in your home on a recurring basis, you should expect workers’ compensation to be required.
PAID LEAVE REQUIREMENTS (PENNSYLVANIA-SPECIFIC)
Pittsburgh has its own Paid Sick Days Act, which applies to many in-home caregivers working within city boundaries.
Household employers must provide paid sick time if the nanny performs at least 35 hours of work per calendar year within the City of Pittsburgh.
Covered nannies earn:
1 hour of paid sick time for every 35 hours worked in Pittsburgh
Unused time carries over year to year (up to the cap)
The annual caps are:
Up to 24 hours for employers with fewer than 15 employees
Up to 40 hours for employers with 15+ employees
Employees may begin using accrued sick time after 90 days of employment, and paid sick time must be paid at the nanny’s regular rate.
Why Pittsburgh families can benefit from a written nanny contract
A nanny contract isn’t just a formality — it’s your shared roadmap between your family and your nanny.
A strong contract covers:
Pay rate + overtime
Work schedule and expected hours
PTO, holidays, and sick leave
Duties and responsibilities
Communication preferences
How raises or reviews will be handled
Termination terms
Household and safety guidelines
Bonus: Here’s a sample nanny contact you can download for free to get started.
How do household taxes work in a nanny share?
In a nanny share agreement, each family is independently responsible for fulfilling household employer obligations. Each family must:
Get an EIN (your Federal Employer Identification Number)
Pay their share of the nanny’s wages
Register for required PA accounts
Withhold and remit taxes
Provide a W-2 at year-end and file Schedule H
Submit PA new-hire reporting within 15 days to Department of Labor
Comply with employment laws
In a nanny share arrangement, each family must pay their portion of the nanny’s wages, withhold the correct taxes, and complete their own employer filings for the year.
Can families handle payroll themselves?
Yes — some families choose the DIY route, and it can work with enough time and attention.
But most parents tell us they’d rather hand off the filings, deadlines, calculations, and year-end forms to someone who does this every day.
That’s where our partner Poppins Payroll comes in.
If you DIY payroll, you’ll handle:
Setting up 4–5 state + local tax accounts
Calculating taxes each pay period
Filing federal, state, and local payroll returns
Tracking PTO, sick leave, and holidays
Preparing + issuing W-2s and Schedule H
Submitting new-hire reporting
With Poppins Payroll:
EIN + PA unemployment account is set up for you
New-hire reporting
State + local tax account assistance
Accurate payroll + tax calculations
Filing of federal, state, and local payroll returns
PTO + sick leave tracking
W-2s + Schedule H prepared and delivered
Support for nanny shares
In short: Poppins handles the details so you can focus on family.
FINAL THOUGHTS FOR PITTSBURGH MOMS
Navigating household payroll may feel intimidating at first, but with the right information and support, it becomes just another part of running a smooth, well-supported home.
We ended up choosing my sister (who was, truly, the perfect nanny). It was such a weight off my shoulders (and hers) to know that when she was preparing to purchase a home, a new car, or doing her taxes, that she had everything she needed.
We’re grateful to partner with Poppins Payroll to help Pittsburgh families feel confident, informed, and in control while caring for the people who care for their children.
If you’re ready for a simpler way to handle nanny payroll — or just want to learn more — you can explore Poppins’ resources or try their service whenever you’re ready.
Try Poppins Payroll
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