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

Pennsylvania has a low flat state income tax of 3.07%, but Philadelphia (3.75% for residents) and Pittsburgh (3%) have significant local wage taxes that employers must withhold.

State unemployment insurance (SUI). Pennsylvania requires household employers to register and pay state unemployment tax once you cross the federal $1,000/quarter threshold (some states use a lower threshold — California is $750/quarter, New York and DC are $500/quarter). New-employer rate range in Pennsylvania: 1.75% - 10.95%. Missing the registration is one of the most common audit findings — the simulator flags it as soon as your quarterly wages cross the threshold.

State income tax withholding. Pennsylvaniahas 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. 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. The simulator flags missing local registrations.

Minimum wage. The minimum wage in Pennsylvania is $7.25/hour (federal). 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 Pennsylvania rules apply to your situation — each finding comes with dollar exposure and a concrete next step.