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 Michigan household employer rules differ
Michigan has a flat 4.25% state income tax. Detroit and about 23 other cities impose local income taxes, but Michigan doesn't let a household employer withhold them, so a nanny pays it on their own city return. The personal exemption significantly reduces taxable income.
State unemployment insurance (SUI). Michigan 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 Michigan: 0.05% - 10.78%. Missing the registration is one of the most common audit findings.
State income tax withholding. Michigan has state income tax, which means you may need to withhold from your nanny's paycheck (it depends on whether they elect withholding on the state W-4 equivalent). If they do, you owe quarterly remittance and an annual state W-2 reconciliation.
Local income taxes. Michigan has significant local income tax layers: Detroit, Grand Rapids, Saginaw and ~20 other cities collect local income tax, but a household employer may not withhold it. There's no local agency for you to register with. Your nanny pays it with their own city return.
Minimum wage. The minimum wage that applies to a nanny in Michigan is $7.25/hour. That is the federal floor, because the state's own rate only covers households with 2 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.
Michigan household employer questions
The state-specific rules behind every finding.