This article is for household employers who pay workers like nannies, babysitters, housekeepers, or caregivers.
Household payroll applies when you pay someone who works in your home (IRS definition here).
We do not support household employer payroll because the tax rules differ from those for regular employees or contractors.
If you need help, we recommend Poppins Payroll. They can manage payroll, taxes, and compliance for household employees.
Q: Who counts as a household employee?
A: The Internal Revenue Service (IRS) says someone is a household employee if:
They work in your home, and
You control when, where, and how they do their job.
Household employees are not independent contractors.
Examples include:
Babysitters
Nannies
Housekeepers
Caregivers
Home health aides
Q: Why should I pay household employees legally?
A: Paying a household employee without reporting their wages is not legal. If you pay a household employee more than $2,800 in a year, or more than $1,000 in one quarter, you need to pay:
Social Security
Medicare
Federal unemployment tax (FUTA)
Most states also require state unemployment tax. Some cities have local rules too.
You do not have to withhold income tax unless the employee asks and you agree. But doing so may help them avoid a large tax bill at tax time.
Q: How much do household payroll taxes cost?
A: Household employers pay about 10% of gross wages in taxes. This usually includes:
Employer share of Social Security and Medicare
Federal and state unemployment taxes
In some states, disability or paid family leave
You also need to withhold the employee’s share of Social Security and Medicare.
Q: What steps are required for tax compliance?
A: To follow tax rules as a household employer:
Get a Federal Employer Identification Number (EIN).
Set up state and local tax accounts.
Report your new hire.
Withhold and pay federal and state taxes.
File tax forms on time.
Prepare Schedule H (Form 1040).
Send your employee a Form W-2.
Pay your employee on time.
Q: Can you get tax credits?
A: Yes. You may qualify for the Child and Dependent Care Credit:
Up to $600 for one child
Up to $1,200 for two or more children
The credit is worth up to 20% of eligible child care costs.
You may also use a dependent care flexible spending account (DCFSA) to save money. This lets you set aside up to $5,000 pre-tax to help pay for child care.
Q: What other laws apply?
A: You may also need to follow these rules:
Minimum wage laws
Overtime pay rules
Sick leave or paid time off, depending on your state
Poppins Payroll can help you track time off and leave balances.
Q: Who can help with household payroll?
A: Poppins Payroll is our recommended partner for household employers. They can help you:
Run payroll
Handle taxes
File W-2 and Schedule H
Stay compliant with all state and federal rules
Visit Poppins Payroll to learn more about features and pricing.