What would the IRS flag about how you've been paying your nanny?
Answer 6 questions. We'll run the same checks a tax professional would and show you the specific findings — with dollar exposure and how to fix each one.
Educational only. Not tax, legal, or accounting advice. Consult a licensed tax professional for your specific situation.
How Alabama household employer rules differ
Alabama exempts domestic help in a private home from state income tax withholding. Household employers don't withhold Alabama state income tax from their nanny's paycheck, though the nanny remains responsible for any income tax they owe at year-end. Employer-side SUI is still required.
State unemployment insurance (SUI). Alabama requires household employers to register and pay state unemployment tax once you cross the federal $1,000/quarter threshold (some states use a lower threshold — California is $750/quarter, New York and DC are $500/quarter). New-employer rate range in Alabama: 0.65% - 6.8%. Missing the registration is one of the most common audit findings — the simulator flags it as soon as your quarterly wages cross the threshold.
No state income tax withholding. Alabamahas no state income tax (or exempts domestic-service wages from withholding), so there's nothing to deduct from your nanny's paycheck on the state side. You still owe the federal baseline (FICA, FUTA, Schedule H) and any SUI obligation.
Local income taxes. Alabama has significant local income tax layers — Birmingham and other cities have occupational taxes (Birmingham's is 1%). Depending on where the employee actually works (resident vs. work locality), you may need to register with multiple local agencies. The simulator flags missing local registrations.
Minimum wage. The minimum wage in Alabama is $7.25/hour (federal). If you paid below this rate, the simulator surfaces it as a Department of Labor exposure — separate from tax findings, and often more expensive (back wages plus liquidated damages).
Run the audit above to see exactly which Alabama rules apply to your situation — each finding comes with dollar exposure and a concrete next step.
Alabama household employer questions
The state-specific rules behind every finding.