Nanny Tax Basics: Paying Household Workers and Schedule H
Published November 5, 2026
Some families hire a nanny, babysitter, housekeeper, or yard worker. If you control what that worker does and how they do it, the worker is your household employee. You may owe federal employment taxes for that worker. These are often called nanny taxes. IRS: Topic no. 756, Employment taxes for household employees
Who counts as a household employee
Household work is work done in or around your home. Examples include babysitters, cooks, drivers, housekeepers, maids, nannies, and yard workers. The worker is your employee if you control the work and how it is done. It does not matter if the work is full time or part time, or if you pay by the hour, day, week, or job. IRS: 2025 Instructions for Schedule H
A worker who runs a business of their own and offers services to the public is usually not your employee. A worker sent by an agency is also usually not your employee, when the agency controls who does the work and how it is done.
The 2025 $2,800 cash wage test
For 2025, you must withhold and pay social security and Medicare taxes if you paid cash wages of $2,800 or more to any one household employee. The test counts all cash wages you paid in 2025, including the first $2,800. Cash wages include checks and money orders. They do not include the value of food, lodging, or other noncash items you give the worker. IRS: 2025 Instructions for Schedule H
Some wages do not count. Wages you pay your spouse, your child under age 21, or your parent generally do not count. A parent can count in some cases, when the parent cares for your child. Wages paid to a worker under age 18 generally do not count, unless household work is that worker's main job. IRS: 2025 Instructions for Schedule H
Social security and Medicare taxes
You and your employee each pay 7.65% of cash wages. That is 6.2% for social security and 1.45% for Medicare. For 2025, social security tax applies only to the first $176,100 of wages paid to each employee. Medicare tax has no wage limit. You generally withhold your employee's share from their pay, and you pay your own share too. If you pay your employee's share yourself, that amount counts as wages for income tax withholding. IRS: 2025 Instructions for Schedule H
Federal income tax withholding
You do not have to withhold federal income tax from a household employee's pay. You should withhold it only if your employee asks you to and you agree. The employee must give you a completed Form W-4 first. IRS: 2025 Instructions for Schedule H
Federal unemployment (FUTA) tax
You may also owe FUTA tax. You owe it if you paid total cash wages of $1,000 or more in any calendar quarter of 2024 or 2025 to your household employees. The tax applies to the first $7,000 you pay each employee in a calendar year. The FUTA rate is 6.0% for 2025. You may be able to take a credit of up to 5.4%, which leaves a net rate of 0.6%. To take that credit, you must pay your state unemployment contributions for 2025 by April 15, 2026. Only the employer pays FUTA tax. Do not take it out of the employee's pay. IRS: 2025 Instructions for Schedule H
Forms to file
If you paid an employee $2,800 or more in cash wages subject to social security and Medicare taxes, you must file Form W-2 for that employee. You also send Form W-3 with Copy A of the W-2 to the Social Security Administration. For 2025, that was due by February 2, 2026. You need an employer identification number (EIN) to file Schedule H. Do not use your Social Security number in place of an EIN. IRS: 2025 Instructions for Schedule H
Attach Schedule H to your federal return. The total from Schedule H goes to Schedule 2 (Form 1040), line 9. For 2025, the return and Schedule H were due April 15, 2026, unless you had an extension. IRS: 2025 Instructions for Schedule H
Illustration only, with made-up numbers. Pat pays a babysitter $150 every week for all of 2025. That is $7,800 for the year, which is more than $2,800. Pat must withhold and pay social security and Medicare taxes. Pat does not have to withhold federal income tax unless the babysitter asks and Pat agrees.
Records to keep
Keep copies of Schedule H and the related Forms W-2, W-3, and W-4 for at least 4 years. Count from the due date of Schedule H or the date the taxes were paid, whichever is later. Each payday, record the dates and amounts of wages, social security and Medicare tax, and any federal income tax you withheld. IRS: 2025 Instructions for Schedule H
Steps to take
- Confirm the worker is your employee, not a self-employed person or an agency worker.
- Add up all cash wages you paid that worker in 2025.
- If the total is $2,800 or more, withhold and pay social security and Medicare taxes.
- Check whether you paid $1,000 or more in cash wages in any quarter of 2024 or 2025. If you did, FUTA tax applies.
- Get an EIN, file Forms W-2 and W-3, and attach Schedule H to your return.
General information, not advice about your return.
Sources: Sources: IRS, Topic no. 756, Employment taxes for household employees (https://www.irs.gov/taxtopics/tc756); IRS, 2025 Instructions for Schedule H (https://www.irs.gov/pub/irs-pdf/i1040sh.pdf) This is general information, not advice about your specific return.
