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 Pennsylvania household employer rules differ
Pennsylvania has a low flat state income tax of 3.07%. Philadelphia and Pittsburgh also have local wage taxes, but a household employer doesn't withhold them the way a business does. Philadelphia's can be withheld only if your nanny agrees, and Pittsburgh's earned income tax isn't withheld at all, so your nanny pays those taxes directly. Pittsburgh's $52 a year Local Services Tax is still withheld from their pay unless they qualify for an exemption and give you the exemption certificate.
State unemployment insurance (SUI). Pennsylvania 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 Pennsylvania: 1.419% - 10.3734%. Missing the registration is one of the most common audit findings.
State income tax withholding. Pennsylvania 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. Pennsylvania has significant local income tax layers: EIT (earned income tax) and PSD codes apply in nearly every municipality. Depending on where the employee actually works (resident vs. work locality), you may need to register with multiple local agencies.
Minimum wage. The minimum wage in Pennsylvania is $7.25/hour (federal). 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.
Pennsylvania household employer questions
The state-specific rules behind every finding.