What would the IRS flag about how you've been paying your nanny?
Answer 12 questions. We'll check common federal and state household-employment issues and show you what needs review.
Educational only. Not tax, legal, or accounting advice. Consult a licensed tax professional for your specific situation.
How Arkansas household employer rules differ
Arkansas excludes domestic service wages from the definition of 'wages' entirely, so household employers don't withhold state income tax from their nanny's paycheck. The nanny remains responsible for any income tax they owe at year-end. Employer-side SUI is still required.
State unemployment insurance (SUI). Arkansas requires household employers to register and pay state unemployment tax once wages cross its applicable threshold. New York and DC use $500 per quarter; many states use $1,000. 2026 unemployment tax rates in Arkansas: 0.1% - 14%. Missing the registration is one of the most common audit findings.
No state income tax withholding. Arkansas does tax individual income, but it exempts wages for domestic service in a private home from withholding, so there's nothing to deduct from your nanny's paycheck on the state side. Your nanny still reports those wages on their own Arkansas return. You owe the federal baseline (FICA, FUTA, Schedule H) and any SUI obligation.
Minimum wage. The minimum wage that applies to a nanny in Arkansas is $7.25/hour. That is the federal floor, because the state's own rate only covers households with 4 or more employees. Paying below the rate that applies is a wage problem with the Department of Labor, separate from taxes and often more expensive, because you owe the back wages plus a penalty on top.
Arkansas household employer questions
The state-specific rules behind every finding.