What would the IRS flag about how you've been paying your nanny?

Arizona SUTA runs 0.03% - 8.36% by claims history, with a separate rate for new employers.

• You owe it once you pay $1,000 in any calendar quarter (the federal household-employer threshold)
• Filings are usually quarterly, with an annual reconciliation
• Your assigned rate moves over time, depending on whether former employees file unemployment claims

No. Arizona does not allow state income tax to be withheld from a nanny's pay, even if you and your nanny both want it.

• Nothing comes out of the paycheck for Arizona income tax
• Arizona does tax income, so your nanny reports these wages and pays what they owe on their own Arizona return

A.R.S. § 43-403(A)(2)

At least $15.15 an hour for a nanny in Arizona.

• That is Arizona's own minimum wage, above the federal $7.25 floor
• Some cities set a higher floor, so check the rate where the work happens before you set one
• Overtime is 1.5x pay for hours over 40 in a week, under the FLSA
• Live-in nannies are exempt from FLSA overtime, but not from minimum wage

US DOL, State Minimum Wage Laws

No. Arizona does not require state disability insurance or paid family leave for household employees.

• Your obligations are the federal baseline: FICA, FUTA and Schedule H
• Arizona state unemployment insurance still applies on the employer side

These are the findings that come up most often for Arizona household employers.

• Treating a household worker as a 1099 contractor when their schedule and duties make them a W-2 employee under IRS Publication 926
• Missing Arizona unemployment insurance registration after crossing $1,000 in any calendar quarter (the federal household-employer trigger)
• Paying below $15.15/hour or skipping FLSA overtime, which is a Department of Labor (not IRS) finding

Federal exposure layers on top of all of these: no Schedule H filed, no W-2 issued, no EIN, and any FICA underpayment.