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

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. New-employer rate range in Michigan: 0.05% - 10.78%. Missing the registration is one of the most common audit findings — the simulator flags it when your quarterly wages cross the applicable threshold.

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. The simulator flags missing withholding setup or unreported wages.

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 in Michigan is $13.73/hour. 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 Michigan rules apply to your situation — each finding comes with dollar exposure and a concrete next step.