Topic guide · updated 2026-07-31
Hiring someone to work in your home
When a nanny, caregiver, or housekeeper becomes your employee for tax purposes: the wage threshold that triggers Social Security and Medicare, the separate FUTA trigger, what it all costs, and what each state adds on top.
Paying someone to work in your home can make you an employer, with tax obligations that look like a small business but file like a personal return. The threshold is lower than most people expect, and the rules turn on control over the work rather than on hours or job title.
This cluster covers the federal tests, the real cost of employing someone once taxes are added to wages, and the state registration layer that federal guidance does not mention.
Control decides employee or contractor
The IRS common-law test asks who directs the work. If you set the schedule and decide how the job is done, the worker is generally your employee — regardless of how the arrangement is described or whether it is part-time. Someone who controls their own work, brings their own equipment, and serves other clients is generally self-employed and handles their own taxes.
Two separate thresholds, two separate taxes
Once cash wages to a household employee reach the annual threshold — $3,000 for 2026 under Publication 926 — Social Security and Medicare apply, 6.2% and 1.45% from each side. Federal unemployment tax has its own trigger: $1,000 paid in any calendar quarter, applied to the first $7,000 of wages. Crossing one does not necessarily mean crossing the other.
The true cost is more than the wage
Employer-side Social Security, Medicare, and FUTA sit on top of the wage, and state unemployment tax and — in many states — workers' compensation insurance sit on top of that. Some employers also choose to pay the employee's share rather than withholding it, which counts as additional wages for income tax purposes.
States add registration, reporting, and insurance
Household employers generally register with the state for unemployment tax, report the new hire, and in some states carry workers' compensation once hours or wages cross a threshold. Requirements vary sharply: New Jersey requires coverage with no threshold, while several states exempt domestic employment entirely. Each state page carries its own agency's rule and links.
Tools in this topic
Every calculator and explainer in this cluster, each built on verified figures with its official source linked.
Nanny Tax
Estimate the household-employer taxes on wages paid to a nanny, caregiver, or housekeeper: Social Security and Medicare once cash wages reach $3,000 for 2026, federal unemployment tax on the first $7,000, your all-in cost as the employer, and your employee’s take-home pay.
Nanny Tax Quiz
A short screener that walks the Publication 926 tests in order: whether the worker is your employee rather than self-employed, whether a family exemption applies, and whether expected cash wages cross the 2026 threshold. It gives a fact-framed estimate with the rule behind each answer.
Guides
Key terms
Frequently asked questions
It depends on total cash wages for the year and on whether the worker is your employee under the control test. The 60-second screener walks the Publication 926 tests in order and shows the rule behind each answer.
Official sources for this topic
Every figure and rule referenced above is published by one of these agencies, and each of them — not this site — determines what is actually paid.
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