Everything about nanny taxes flows from one distinction: is the person who works in your home an employee or an independent contractor? If they're an employee, you're a household employer with tax responsibilities. If they're truly a contractor, most of it doesn't apply. Here's how to tell — quickly and honestly.

The one question that decides it: control

The IRS test is about control. If you control not just what work gets done but how it gets done, the worker is your employee. It doesn't matter what you call them, whether the work is full- or part-time, or whether you pay hourly or by the day.

  • You set the schedule — the hours they show up and leave.
  • You decide how the job is done — your rules, your routines, your house.
  • You provide the workplace and tools — your home, your kids, your supplies.
  • The work is ongoing, not a one-off project with a defined end.
Answer 'yes' to most of these and you have a household employee. A nanny you hire to care for your children on your schedule, in your home, is the textbook example.

Who counts as a household employee?

It's not only nannies. The same rules cover most people you hire to work in or around your home on your terms:

  • Nannies and full- or part-time babysitters with a set schedule
  • Housekeepers and house cleaners you direct
  • Senior caregivers and home health aides
  • Private cooks, drivers, and household managers

Who usually isn't your employee

Some workers really are independent — they run their own business, serve many clients, and control their own work:

  • An occasional date-night babysitter who sets their own rates and picks up jobs from many families
  • A cleaning company that sends its own staff, sets the process, and brings its own supplies
  • A daycare center or preschool (a business, not a person you employ)
  • A contractor doing a defined project — say, a landscaper regrading your yard
A regular, full-time nanny is almost never a contractor — no matter how you'd prefer to classify them. Handing a nanny a 1099 is the single most common (and riskiest) misclassification families make.

The dollar thresholds that turn it on

Being a household employer only creates tax obligations once you pay enough. Two triggers to watch (2026 figures):

  • $3,000+ in cash wages to one employee in the year → you owe Social Security and Medicare (FICA).
  • $1,000+ in a single calendar quarter → you owe federal unemployment tax (FUTA).

If you cross those lines, House handles the withholding, pay stubs, and year-end forms for you — free.

Set up my household

The bottom line

If you control how and when the work happens, in your home, on an ongoing basis, you're a household employer. Once you pay $3,000+ for the year, the nanny tax applies — and the rest of these guides walk you through exactly what to do.