Do I Need to Pay Taxes for My Babysitter?

Here's the deal: you probably don't owe taxes for your babysitter. But if you're paying them regularly, you might be closer to the threshold than you think. (For a quick overview, see our babysitter taxes landing page.)

Already know you owe taxes? Jump to our W-2 filing guide or Schedule H walkthrough.

Let's break this down.

Looking for a deeper dive? See our complete nanny tax guide for rates, thresholds, and calculator.

The $3,000 Rule (2026)

The IRS says you owe household employment taxes when you pay any single worker above the annual threshold in a calendar year. For 2026, that threshold is $3,000. This applies to:

• Nannies
• Babysitters
• Housekeepers
• Senior caregivers
• Anyone who works in your home (not sure if they're an employee? See our employee vs. contractor guide)

Below that threshold? You're in the clear—no paperwork, no withholding, no quarterly payments.

When Babysitter Pay Adds Up

Here's where people get surprised. $3,000 sounds like a lot until you do the math:

If you have a regular babysitter—even just for date nights—track what you're paying them. It's easy to cross $3,000 without realizing it.

What If I Use Multiple Babysitters?

Good news: the threshold applies per person. If you pay three different babysitters $2,000 each, you don't owe any taxes because none of them individually crossed $3,000.

But if one babysitter gets most of your business and crosses the threshold, you'll need to handle taxes for that person.

I Crossed the Threshold—Now What?

Don't panic. Lots of families figure this out mid-year. Here's what to do:

1. Get an EIN — Free and takes 5 minutes at irs.gov
2. Start withholding taxes — 7.65% from their pay (Social Security + Medicare)
3. Set aside your share — Another 7.65% from your pocket
4. Pay quarterly taxes — Due April 15, June 15, September 15, January 15. Check your state requirements too.
5. Issue a W-2 by January 31 — For the wages you paid that year
6. File Schedule H — Report your household employment taxes with your personal tax return

Use our nanny tax calculator to see exactly what you'll owe.

Try NannyKeeper free →

Can I Just Pay Cash and Skip This?

Technically, no. The law requires you to pay employment taxes once you cross the threshold, regardless of how you pay your babysitter.

That said, enforcement on small amounts is rare. But here's why going legit is worth it:

• Your babysitter builds Social Security credits
• They qualify for unemployment if you let them go
• You avoid back taxes and penalties if audited
• You can claim the Child and Dependent Care Credit — worth up to $2,100 for two or more children, but only if you report wages properly

The Simple Solution

If your babysitter is approaching $3,000, you have two options:

Option 1: Stay under the threshold Use a second babysitter to split the hours. Track payments carefully.

Option 2: Handle it properly Sign up for NannyKeeper and we'll calculate everything automatically. It's $10/month—way less than other payroll services and way less than the penalties for getting it wrong.

FAQ

Does the threshold include tips?

Yes. All cash wages count toward the annual threshold, including tips you give directly.

What if I pay through Venmo or PayPal?

The method doesn't matter. Cash, check, Venmo, PayPal—if the total exceeds the annual threshold ($3,000 for 2026), you owe taxes.

Do I need to pay taxes for my teenager's babysitter?

Same rules apply. If you pay any individual above the annual threshold ($3,000 for 2026), you're a household employer.

What about babysitters under 18?

You don't need to pay FICA taxes (Social Security and Medicare) for workers under 18 if household work isn't their main job. But this exception is rare—most regular babysitters are adults.

Can I claim the Child and Dependent Care Credit for babysitter costs?

Yes, if the babysitter watches your child under 13 while you work. You can claim up to $3,000 for one child or $6,000 for two or more children. The credit is 20–35% of expenses depending on your income — worth up to $1,050 for one child or $2,100 for two or more. You'll need to report wages on Schedule H and file Form 2441 with your babysitter's name, address, and SSN or EIN.

What are the penalties for not paying babysitter taxes?

The IRS can assess penalties of 1.5% of unpaid wages per month for failing to withhold, plus 0.5% per month for late payment, plus interest. Those add up fast. Many families also lose the Child and Dependent Care Credit (worth up to $2,100) since it requires reporting wages on Schedule H. In most cases, the credit alone is worth more than the cost of doing payroll properly.

What if I paid cash and didn't keep records?

Start tracking now. Estimate what you've paid so far this year and begin keeping records going forward. The IRS cares most that you're making a good-faith effort to comply. A nanny payroll service like NannyKeeper can help you track payments and calculate taxes from any start date — no judgment, just math.