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

California SUTA runs 1.5% - 6.2% by claims history, with a separate rate for new employers.

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

Usually not. California has a state income tax, but withholding it from a household employee is optional unless your nanny asks for it.

• It is usually optional, and your nanny elects it on California's W-4 equivalent
• If they do elect it, you owe quarterly remittance to the state and an annual reconciliation return that includes the W-2 you issued

At least $16.90 an hour for a nanny in California.

• That is California's own minimum wage, above the federal $7.25 floor
• California raises it to $17.40/hour from January 1, 2027
• Some cities and counties set a higher floor, so check your locality before you set a rate
• 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

Yes, disability insurance. California State Disability Insurance (SDI) and Paid Family Leave (PFL), both administered by EDD covers household employees.

• Funding is usually employee-side withholding
• You register and remit for it separately from unemployment insurance

These are the findings that come up most often for California 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 California EDD registration after paying $750 in a calendar quarter, which is when registration and disability insurance start (unemployment insurance starts at $1,000 in any calendar quarter)
• Under-withholding California state income tax when the employee has elected withholding on the state W-4 equivalent
• Missing registration or under-withholding for California State Disability Insurance (SDI) and Paid Family Leave (PFL), both administered by EDD
• Paying below $16.90/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.