Families paying a nanny or caregiver: household payroll and the nanny tax done for you
Free tax review
Find out what we’d handle and what it costs
Thirty minutes by phone; you leave with one written price.
Each payday we run payroll for your nanny, housekeeper or caregiver; at year end we file W-2s and prepare Schedule H, the household employment tax form, on your return. Household payroll starts at $95 a month, quoted as a flat fee in writing before we start. Based in Santa Clarita, we work with families in any state.
Typical situations
Do you work with families paying a nanny, housekeeper or caregiver?
Yes, we take on families who pay someone to work in their home: a full-time nanny, a nanny shared with another family, a caregiver for an aging parent, a weekly housekeeper, a grandparent who watches the kids, and families with past years never filed.
A couple with a full-time nanny
The nanny is paid every Friday by Zelle, since spring, with nothing withheld and nothing filed this year. We’d work from the Zelle history with dates and amounts, the nanny’s legal name, address and Social Security number, and the couple’s own pay stubs. With nothing taken out of the Zelle payments and nothing paid during the year, both shares of the household taxes land on the couple’s own return in April. The family is responsible for the nanny’s share of Social Security and Medicare as well as its own, and can take the nanny’s share out of each paycheck or pay it from its own money. We put the nanny on household payroll on the couple’s schedule — the Friday Zelle becomes a Friday direct deposit with a pay stub — and pick up the pay so far from the Zelle history so the nanny’s W-2 is right at year end.
Two families sharing one nanny
One nanny splits the week between two homes. What we need is each family’s payments, how the pay is split, and the other family’s contact. Each family assumes the other is handling it, so nothing gets filed for the nanny at all. We sort out the employer side with both families before anything is filed, and the share is priced into the quote.
An adult child paying a parent’s caregiver
The caregiver looks after an aging parent in the parent’s home, found through an agency’s list and paid directly from the adult child’s account. We’d start from the agency agreement, the payment record and the caregiver’s weekly hours. Nothing gets filed, because the family assumes the agency is the employer. A caregiver sent by an agency that controls what work is done and how isn’t the family’s employee, but when an agency only gives a name and the family hires and pays the caregiver directly, the caregiver may be the family’s employee. We read the agreement and the pay record and work out who the employer is: the adult child who pays or the parent whose home it is.
A family with a weekly housekeeper
The housekeeper comes every week. What we need is the payments, whose cleaning supplies are used, who sets the list of what gets done, and whether the housekeeper cleans other homes as their own business. A family that sets the list and buys the supplies can be the housekeeper’s employer without knowing it, and a year can go by with no W-2 when one was due. We apply the test to the family’s facts first and, if it’s employment, track the pay — checks, cash or transfers — from the next payday. If the family keeps paying the housekeeper itself, the year-end W-2 on its own starts at $95.
A grandparent paid to watch the kids
A grandparent watches the children three days a week. We’d look at the payments to the grandparent, the children’s ages and the paying parent’s marital status. Get the rule for paying a parent wrong and the family either pays tax it didn’t owe or leaves off tax it did. Wages paid to one’s own parent aren’t counted for Social Security and Medicare unless the grandparent cares for a grandchild under 18 (or one whose condition needs an adult’s care for at least four straight weeks in the quarter) and the parent paying is divorced and not remarried, widowed, or living with a spouse whose condition prevents caring for the child. We check the children’s ages and the family’s situation against the IRS list before the first W-2.
A family that paid a nanny for years and filed nothing
We’d start from each year’s Venmo history (dates and amounts), the nanny’s legal name, address and Social Security number, and the returns the family already filed for those years. The nanny has no W-2 for any of those years, and each year’s household taxes are still unpaid. We rebuild the pay record year by year, oldest first, and file what’s missing; the catch-up section says how, and the catch-up is priced into the quote.
The nanny tax
Does a family paying a nanny, housekeeper or caregiver owe the nanny tax?
A family is a household employer when it pays someone to do household work in or around its home and controls not only what work is done but how it is done, and the nanny tax is the household employment taxes: Social Security, Medicare and federal unemployment tax. Social Security and Medicare apply once the family pays one household employee $3,000 or more in cash wages (pay by check, cash or transfer, not meals or a room) in 2026 — it was $2,800 for 2025 — and under $3,000 for the year none of that worker’s wages are taxed for them. Federal unemployment tax (FUTA) is a separate test: it applies once the family pays household workers $1,000 or more in cash wages in any calendar quarter of 2025 or 2026, on the first $7,000 of each worker’s pay, and it comes from the family’s own money, never out of the paycheck.
On the call we apply the control test to the family’s facts — who sets the schedule, who gives the instructions, whose supplies are used, whether an agency directs the work — and from the first payday we track each worker’s cash wages against the $3,000 yearly threshold and the $1,000 quarterly one.
Filing and paying
What does a household employer file, and when are the taxes paid?
A household employer gives a 2026 W-2 — the year-end wage statement — to each employee whose 2026 cash wages reached $3,000, or whose pay had income tax withheld, and sends it with Form W-3, the cover form, to the Social Security Administration by February 1, 2027. The household taxes go on Schedule H with the family’s own 2026 Form 1040 and are paid by April 15, 2027.
An extension for the return applies to Schedule H too. An estimated-tax underpayment penalty may apply, so the family can cover the taxes during the year with a new Form W-4 (the withholding form) at its own job, or with estimated payments (tax paid to the IRS during the year) — the last 2026 one is due January 15, 2027. We figure the year’s household taxes from your payroll so you can set the W-4 or the estimated payments.
We file the W-2 and W-3 with payroll, and we prepare Schedule H on your own return. If the family has no EIN yet — employer identification number, its own nine-digit employer number from the IRS — we get it as part of setup.
Catching up
What happens if a family paid a nanny or caregiver and never filed?
A family that owed household taxes on a worker’s pay and filed nothing is generally liable for the taxes that should have been withheld and paid, and interest and penalties may be charged; we file the missing years one at a time, oldest first.
What we ask for
The bank and payment-app statements for each year the worker was paid, the returns already filed for those years, the worker’s details, and any letters from the IRS or the state.
How the catch-up runs
The pay record is rebuilt from those statements, one year at a time. Each year produces that year’s W-2s and W-3, and that year’s Schedule H with the family’s return — attached to an amended return (Form 1040-X) where the return was already filed, with W-2s, or corrected W-2s (Form W-2c) where one already went out wrong, to match. We bring the state registration and reports for the years behind current. If an IRS letter about one of those years has already arrived, our IRS representation team handles it.
What you get
Each year closed out: W-2s the worker can file with, Schedule H on your return for each year (amended where the return was already filed), the state side brought current, and this year’s payroll starting from a clean record.
Every payday
What do you handle each payday?
Each payday we run your nanny’s, housekeeper’s or caregiver’s pay on your schedule, with direct deposit, a pay stub and the year-to-date total kept current.
- The pay run on your schedule — weekly, biweekly or monthly
- Direct deposit and a pay stub each run
- Year-to-date pay picked up and reconciled if you start mid-year
- PTO and sick leave tracked
- New-hire reporting to the state when someone starts
- The year’s household taxes figured from your payroll
- Every pay run confirmed with you
- A payroll-tax notice handled if one shows up
California
What’s different for a household employer in California?
In California, five things are different for a household employer: registering with the EDD (California’s Employment Development Department), the state wage reports and returns, the new-hire report, who counts as an employee, and IHSS (In-Home Supportive Services).
- Registering with the EDD. Once a family pays $750 in cash wages in a calendar quarter, it registers with the EDD within 15 days on the DE 1HW, and from then State Disability Insurance (SDI) comes out of the worker’s pay; from $1,000 in a calendar quarter the family also pays Unemployment Insurance and the Employment Training Tax, both for the rest of that year and all of the next, even in a slow quarter. We register you as part of setup, inside your quote, and the SDI shows on each pay stub.
- The state wage reports and returns. State income tax withholding is voluntary, but the wages are reported either way; a family paying $20,000 or less a year can elect annual returns (the DE 3BHW each quarter, the DE 3HW for the year), and otherwise it’s the quarterly DE 9 and DE 9C, filed electronically. We check which schedule fits your year and file them as part of payroll.
- The new-hire report. A new or rehired nanny, caregiver or housekeeper is reported to California’s New Employee Registry within 20 days of the first day of work (the DE 34), household employers with a single employee included. We file it as part of payroll.
- Who counts as an employee. EDD’s household guide treats someone paid to work in your home as your employee unless its three-part ABC test is met. We apply it to your facts on the call.
- IHSS. When a parent’s caregiver is paid through IHSS, the State issues the caregiver’s checks and handles the withholding where it applies, the county or the State Department of Social Services reports those wages, and the parent generally doesn’t register with the EDD for them; extra pay added on top is the parent’s to report as the IHSS recipient. We check what the county already reports and handle only the extra wages; questions about IHSS eligibility, hours or pay stay with the county.
Pricing
What does household payroll cost in 2026?
Household payroll starts at $95 a month, the year-end W-2 on its own starts at $95 for a family that pays the worker itself, and individual returns, where Schedule H goes, start at $350. Each is a flat fee quoted in writing before we start.
Getting your EIN, registering with your state, catching up past years, Form 2441 (the child and dependent care form), a nanny share and another state’s household payroll rules sit inside that written quote with no published number; the EIN and the state registration are priced on top of the $95, not inside it. What moves a quote: how many people you pay and how often; one family or a nanny share; which state you live in; what’s been filed so far — an EIN, a state account, W-2s, Schedule H — and how many years are behind; payroll every pay period or only the W-2 at year end; and whether your own return is part of the job.
Household payroll
from $95/mo
- Pay runs on your schedule
- Direct deposit and pay stubs
- New-hire reporting to the state
- W-2s at year end
The W-2 on its own
from $95
- For a family that pays the worker itself
- The year-end W-2 and W-3 prepared and filed
Your own return
from $350
- Schedule H prepared on the same return
- Form 2441 added when it applies, priced in your quote
The quote is the price.
How it works
What happens after the free call?
After the free 30-minute call, you sign the engagement letter sent during it, a short onboarding call follows, and the portal invite comes with a short checklist.
The call
Thirty minutes by phone: who you pay and for what, since when, what’s been filed so far, whether you have an EIN, and which state the work is in. The call ends with one flat price for the work we’d take on, and that price goes in writing.
The engagement letter
Sent during the call and signed when you’re ready — it doesn’t expire. Signing sets up a short onboarding call, and the secure-portal invite comes from that call.
Documents
Through the portal: the pay record so far this year — dates, amounts and how each payment went out — the worker’s legal name, address and Social Security number, any Form W-4, your EIN letter or state account number if you have them, your dependent care FSA statement or the box 10 amount on your W-2, any estimated-payment records, and last year’s return.
Setup and the first pay run
If there’s no EIN or state account yet, we get the EIN and register with the state (both inside the quote). We set the pay schedule, pick up any pay already made this year, and run the first payroll; if past years were never filed, the catch-up runs alongside.
The year end
The W-2 goes to the worker and, with the W-3, to the Social Security Administration, and Schedule H goes on your return. Half the return fee starts the work, and you see the return before it’s filed.
Communication
You’ll know where the payroll and the return stand.
The person who answers the phone is on the same team that runs your payroll and prepares your return.
The same-day rule
Call or email during business hours and you’ll hear back the same day — all twelve months.
Whether we’re the right fit
Bring the payment-app history and last year’s return — the free call ends with a straight answer.
Admitted to practice before the IRS
Our team of IRS representation specialists is admitted to practice before the IRS. If an IRS letter shows up about the payroll or a past year, it goes straight to that team.
The N&T Tax & Advisory Group team
For a family paying a nanny or caregiver, we run the payroll and prepare the return from the same pay record.
Payroll · Tax preparation · Tax planning · IRS representation · Direct line: (661) 554-4495
Reviews
Rated 5.0 on Google
★★★★★ Twelve reviews, every one five stars, every one verifiable. Read all of them on Google →
"Alex helped me resolve a complicated tax situation that had been causing me a lot of stress. He was extremely knowledgeable, responsive, and efficient throughout the entire process."
Kevin B. — via Google
"Working with Alex was straightforward. I hadn't looked at my books all year, but he made my life easy and handled the whole profit and loss at the end of the year so I could get my taxes done."
Levon B. — via Google
"I came to this company with previous tax years and bookkeeping that were done incorrectly. They're very knowledgeable about what they do and help me get everything in order at a very reasonable price."
Sayra A. — via Google
Where we work
Do you work with families outside California?
Yes — based in Santa Clarita, we work with families remotely in any state. Documents move through the secure portal, and we talk by phone and screen share. If you live in another state, we work to that state’s household payroll rules and price it into your quote.
What we don’t do
We handle the tax and payroll side: the pay runs, the filings, the W-2s and Schedule H on your return. What the law requires for pay rates, overtime, minimum wage, breaks or time off is outside our work, and so are immigration and work authorization (the Form I-9 is a separate, non-tax record the family keeps in its own files), workers’ compensation insurance (a separate question), agency recommendations, IHSS eligibility, hours or pay, and legal or employment-law advice.
Worth reading
What can you read before you call?
One article for a single parent paying a nanny, or an adult child supporting a parent.
FAQ
Nanny and caregiver tax questions
Is our nanny an employee or an independent contractor?
A nanny who works in your home on your schedule, follows your instructions and uses your supplies is generally your household employee, full time or part time, paid by the hour or the week. A sitter who cares for your child in the sitter’s own home, a worker an agency sends and directs, or someone running their own business for the public generally isn’t. A 1099 isn’t how a family reports household pay; the IRS’s 1099 instructions say “Personal payments are not reportable.” We apply the test to your facts on the call, and we tell you when a case needs an employment attorney.
Do we have to withhold taxes from our nanny’s paycheck?
Federal income tax withholding isn’t required for a household employee; you withhold it only if the nanny asks and you agree, using the nanny’s Form W-4, and either of you can end that in writing. Social Security and Medicare work differently: once the nanny’s cash wages for the year reach the IRS threshold, you’re responsible for both shares, and if you pay the nanny’s share yourself instead of withholding it, that amount counts as extra pay for the nanny’s income tax. We set the withholding up in payroll from the W-4 and your choice.
Can our nanny’s pay count toward the child care credit or our dependent care FSA?
Yes, when the care lets you work and is for a qualifying child, or a spouse or dependent who can’t care for themselves. The wages and your share of the household taxes can count toward the child and dependent care credit or be paid through a dependent care FSA, a pre-tax account at work for care costs. The nanny’s name, address and Social Security number go on Form 2441, which asks whether the provider was your household employee; for 2026 the dependent care FSA limit is $7,500 ($3,750 married filing separately). We put Form 2441 and Schedule H on the same return from the same pay record.
If you run our household payroll, are you the employer?
No. The family stays the employer: the IRS says a household employer remains responsible for its returns and payments even when it pays someone to handle them, and even if that someone fails to. We handle each pay run and file what we’re engaged to file, and every pay run is confirmed with you.
What happens if our nanny leaves or we hire someone new partway through the year?
When a nanny stops working for you before the end of 2026, the W-2 can go out right after the last paycheck instead of waiting for year end. A new hire’s Social Security number is collected by the first payday, and the hire is reported to the state as part of payroll. We keep each worker’s totals for the year so every W-2 and Schedule H agree.
Do we need an EIN to pay a nanny or caregiver?
Yes — a household employer uses its own EIN, never a Social Security number in its place, on the W-2, the W-3 and Schedule H, and the IRS issues it free. We apply for it with you during setup, and setup sits in your quote, separate from the monthly payroll fee.
Ready to get the payroll and the return handled?
One free 30-minute call. You’ll leave knowing what we’d handle and what it costs — whether or not you hire us.
Rather talk now? Call (661) 554-4495 — reach us during business hours and you’ll hear back the same day.
Our team of IRS representation specialists is admitted to practice before the IRS. This page is general information, not tax advice for your specific situation.