A household employee is someone you pay to work in or around your home when you control what they do and how they do it. That covers nannies, housekeepers, senior caregivers, cooks, drivers and yard workers, full time or part time. If you have one, the IRS calls you a household employer.
This page covers the first year of that: who counts, who does not, the two wage tests, the 2026 numbers, and the forms with their dates.
Who counts as a household employee
A worker is your household employee when you hired them to do household work and you control both what is done and how it is done. The IRS puts it this way in the 2026 edition of Publication 926:
"You have a household employee if you hired someone to do household work and that worker is your employee. The worker is your employee if you can control not only what work is done, but how it is done. If the worker is your employee, it doesn't matter whether the work is full time or part time, or that you hired the worker through an agency or from a list provided by an agency or association."
IRS Publication 926 (2026), "Do You Have a Household Employee?"
"Household work" means work done in or around your private home. Publication 926 lists babysitters, butlers, caretakers, cooks, domestic workers, drivers, health aides, housecleaning workers, housekeepers, maids, nannies, private nurses and yard workers. A private secretary, a tutor or a librarian is not doing household work even when the work happens in your home.
If you are still deciding whether a particular worker is an employee or a contractor, the household employee vs. contractor post walks through the control test question by question.
Who is not a household employee
Three kinds of worker are not your household employee even though you pay them: a self-employed worker who alone controls how the work is done, someone who cares for your child in their own home (Publication 926 says such a worker "generally" is not your employee), and a worker an agency provides and directs.
"If only the worker can control how the work is done, the worker isn't your employee but is self-employed. A self-employed worker usually provides their own tools and offers services to the general public in an independent business."
IRS Publication 926 (2026), "Workers who aren't your employees."
| Worker | Household employee? | Why |
|---|---|---|
| Nanny who works in your home on the schedule you set | Yes | You control the work, and it is done in your home |
| Housekeeper who cleans only your home, with your supplies | Yes | Same control test; the supplies point the same way |
| Caregiver you hired to look after a parent living with you | Yes | Household work in your home, directed by you |
| Lawn service that brings its own crew and equipment | No | A business serving the public controls its own work |
| Family day care provider who watches your child at their house | Generally no | The work is done in the provider's home, not yours; Publication 926 hedges this one with "generally" |
| Worker placed and managed by an agency that also pays them | No | The agency controls the work, so the agency is the employer |
| Tutor who teaches your child at your kitchen table | Not household work | Tutoring is not household in nature under Publication 926 |
Do you owe employment taxes? The two wage tests
You owe federal employment taxes once you cross either of two cash-wage tests: $3,000 to any one household employee in 2026, which triggers Social Security and Medicare taxes, or $1,000 to all household employees combined in any calendar quarter of 2025 or 2026, which triggers federal unemployment tax. One test measures a single employee over the year; the other measures your whole household over three months.
| Tax | 2026 trigger | Rate | Who pays it |
|---|---|---|---|
| Social Security | $3,000 or more in cash wages to one employee in 2026 | 6.2% employer and 6.2% employee, on wages up to $184,500 | Both, half each |
| Medicare | Same $3,000 test | 1.45% employer and 1.45% employee, no wage cap; the employee alone owes a further 0.9% on wages above $200,000 | Both, half each |
| Federal unemployment (FUTA) | $1,000 or more to all household employees in any calendar quarter of 2025 or 2026 | 6.0% of the first $7,000 per employee, usually 0.6% after the state credit | Employer only |
| Federal income tax | Only if the employee asks and you agree, on Form W-4 | Per the employee's W-4 and the IRS withholding tables | Employee, through withholding |
To see those rates as a dollar figure for the wage you have in mind, with your state's unemployment tax added, use the household employer tax calculator.
See what you'll owe
Use our free calculator to estimate what a household employee will cost you in 2026.
The $3,000 test: Social Security and Medicare
Social Security and Medicare taxes apply when you pay any one household employee cash wages of $3,000 or more during 2026, and once you reach that line every dollar of cash wages you paid that employee in 2026 counts (Social Security up to $184,500, Medicare with no cap), not just the amount above $3,000.
"If you pay your household employee cash wages of $3,000 or more in 2026, all cash wages you pay to that employee in 2026 (regardless of when the wages were earned) up to $184,500 are social security wages and all cash wages are Medicare wages."
IRS Publication 926 (2026), "Social security and Medicare wages."
The test is per employee and per calendar year. Two babysitters at $2,000 each do not cross it; one nanny at $3,000 does, on the day the total reaches $3,000. Cash wages means pay by check, cash, direct deposit or money order; the value of meals, lodging or a transit pass you provide does not count. The $3,000 threshold post works through the year's scenarios, from a $75-a-week sitter to a mid-year raise.
The $1,000-in-a-quarter test: federal unemployment tax
FUTA applies when your cash wages to all household employees combined reach $1,000 or more in any calendar quarter of 2025 or 2026, and it is figured on the first $7,000 of cash wages you pay each employee during the year.
The rate is 6.0%, but you can take a credit of up to 5.4% for the state unemployment tax you pay, which brings most families to a net 0.6%: at most $42 per employee per year. Publication 926 says the 2026 credit "is limited unless you pay all the required contributions for 2026 to your state unemployment fund by April 15, 2027," which is one more reason to register with your state early. You pay FUTA from your own funds; it is never withheld from the employee.
Wages you do not count: spouse, child, parent, under 18
Four groups of workers are left out of the Social Security and Medicare test even when you pay them $3,000 or more: your spouse, your child under 21, your parent, and anyone who is under 18 at any time during the year. The last two carry exceptions.
Your parent's wages count only if both conditions hold. Your parent is caring for your child who is under 18 (or who has a physical or mental condition that requires an adult's personal care for at least 4 continuous weeks in the calendar quarter), and you are divorced and not remarried, widowed, or living with a spouse whose physical or mental condition prevents them from caring for your child for at least 4 continuous weeks in that quarter.
An employee under 18 is excluded unless household work is their principal occupation. Publication 926 adds: "If the employee is a student, providing household services isn't considered to be their principal occupation." A high-schooler's after-school babysitting wages stay out of the test even past $3,000.
For FUTA the excluded groups are your spouse, your child under 21 and your parent, with no exceptions. None of these exclusions touch income tax: wages paid to a spouse, child or parent are still taxable income to them. The family employee tax exemptions guide has the full matrix, including in-laws and the states that charge unemployment tax on a parent even when federal law does not.
Federal income tax withholding is voluntary
You are not required to withhold federal income tax from a household employee's wages. You withhold it only if the employee asks you to and you agree, and the request comes on a Form W-4.
"You're not required to withhold federal income tax from wages you pay a household employee. You should withhold federal income tax only if your household employee asks you to withhold it and you agree. The employee must give you a completed Form W-4."
IRS Publication 926 (2026), "Do You Need To Withhold Federal Income Tax?"
Voluntary does not mean the income tax goes away: if you do not withhold, the employee still owes it on their own return, which is why many household employees ask for withholding. Either of you can end the agreement by telling the other in writing.
What you owe in your first year, in order
Your first year runs in a fixed order, from the Form I-9 on day one to Schedule H on April 15, 2027.
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Complete Form I-9 with the employee. The employee fills in their section no later than the first day of work and you complete yours after examining their identity and work-eligibility documents. Keep the form; it is never sent to the IRS or USCIS. The form is at USCIS I-9 Central.
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Get an EIN. Your employer identification number goes on the W-2 and Schedule H you file. If you already have one from a business or earlier household employment, use it; otherwise apply online at IRS.gov, free and issued immediately. An EIN is not a condition of paying or withholding from your employee: Publication 926's own checklist lists it under the February 1, 2027 deadline, next to the W-2, so a pending EIN does not hold up the first paycheck. The EIN guide shows the application step by step.
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Ask for the employee's Social Security number and a W-4. You must ask for the SSN no later than the first day you pay wages and record the name and number exactly as they appear on the Social Security card. The Form W-4 is only needed if the employee wants income tax withheld.
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Withhold each payday and keep the records for four years. Withhold 7.65% for the employee's share of Social Security and Medicare (or pay it yourself, in which case the amount you paid is added to the employee's Box 1 wages for income tax), plus any income tax the W-4 calls for, and set aside your own 7.65% and FUTA. Record the date and amounts of each payday, including the tax withheld, and keep employment tax records for at least 4 years after the return's due date or the date the tax was paid, whichever is later.
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Register with your state. State unemployment tax has its own trigger, registration and quarterly filing, covered below.
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Decide how to pay the federal tax during the year. Publication 926 gives two routes: have more federal income tax withheld from your own paycheck by giving your employer a new W-4, or make estimated tax payments with Form 1040-ES, due April 15, June 15 and September 15, 2026, and January 15, 2027. You can also pay the whole amount with your return in April, but the estimated tax underpayment penalty can apply if too little was paid during the year. The one exception: no penalty if you have no federal income tax withheld from any payments and your income tax on its own, before household employment taxes, would not require estimated payments. The quarterly deadlines post covers the estimated-payment route.
By February 1, 2027: the W-2
You must give your employee Copies B, C and 2 of Form W-2, and send Copy A with Form W-3 to the Social Security Administration, by February 1, 2027. The IRS states both halves flat in the General Instructions for Forms W-2 and W-3: "The due date for filing 2026 Forms W-2 ... with the SSA is February 1, 2027," and "Generally, you must furnish Copies B, C, and 2 of Form W-2 to your employees by February 1, 2027."
Both recurring deadlines are January 31: 26 U.S.C. § 6071(c) for filing with the SSA and 26 U.S.C. § 6051(a) for furnishing the employee's copies. The date moves to February 1 for 2026 wages because January 31, 2027 is a Sunday, and 26 U.S.C. § 7503 treats an act performed on the next business day as timely when the last day falls on a Saturday, Sunday or legal holiday.
A W-2 is required for each household employee you paid $3,000 or more in Social Security and Medicare wages during 2026, or from whom you withheld any federal income tax. If neither applies, Publication 926 says not to send a W-2 to the SSA. The W-2 guide for household employees walks through the boxes and the filing options.
By April 15, 2027: Schedule H
You report and pay the year's household employment taxes on Schedule H, attached to your own 2026 federal income tax return.
"When you file your 2026 federal income tax return in 2027, attach Schedule H (Form 1040) to your Form 1040, 1040-SR, 1040-SS, 1040-NR, or 1041. Use Schedule H to figure your total household employment taxes (social security, Medicare, FUTA, and withheld federal income taxes). Add these household employment taxes to your income tax."
The amount is due April 15, 2027. An extension to file your return extends Schedule H with it, and if you are not required to file a return at all, you file Schedule H by itself. The Schedule H guide goes through it line by line.
State unemployment tax and the rest of your state's rules
Most states require a household employer to register and pay state unemployment tax once wages in a calendar quarter reach a state-set amount, and the amount, the rate and the filing schedule are set by your state, not by the IRS.
"You should contact your state unemployment tax agency to find out whether you need to pay state unemployment tax for your household employee. ... You should also determine if you need to pay or collect other state employment taxes or carry workers' compensation insurance."
Most states use the same $1,000-in-a-quarter figure as FUTA, and a few start lower. Some also require workers' compensation coverage for a household employee, and several run paid family leave or disability programs with their own contributions. Your state's household employer guide lists the wage trigger, the registration portal, the quarterly filing and the leave programs that apply where you live.
Where NannyKeeper fits
NannyKeeper tracks each employee's cash wages against the $3,000 test and the household's wages against the $1,000-a-quarter test, withholds the employee share on every paycheck, and produces the W-2 and Schedule H at year-end with the year's figures already in the boxes.
Ready to simplify household employee taxes?
NannyKeeper handles the calculations, deadlines, and paperwork so you can focus on your family.
Related reading:
- Is your nanny a household employee or contractor?
- The $3,000 nanny tax threshold explained
- Every form you need as a household employer
- Family employee tax exemptions guide
FAQ
Is a nanny a household employee?
Yes. A nanny who works in your home on a schedule you set, doing the tasks you direct, is your household employee under IRS Publication 926, full time or part time and whether or not an agency introduced you. The exceptions are a caregiver who watches your child in their own home and a worker an agency employs, directs and pays.
Do I owe taxes if I pay a household employee less than $3,000 a year?
You owe no Social Security or Medicare tax on that employee's 2026 wages, and no W-2 is required unless you withheld federal income tax. FUTA is a separate test: if your cash wages to all household employees reached $1,000 in any calendar quarter, you owe federal unemployment tax on the first $7,000 you paid each of them. Your state's unemployment tax may start below the federal $1,000-a-quarter figure as well.
Do I need an EIN before the first paycheck?
No. You need an EIN on the W-2 and Schedule H you file for the year; Publication 926's checklist places it under the February 1, 2027 deadline. You can pay and withhold before it arrives. The online application is free and issues the number immediately.
What is the household employee threshold for 2026?
$3,000 in cash wages to any one household employee during 2026. That is the Social Security and Medicare test. The federal unemployment test is separate: $1,000 in cash wages to all household employees combined in any calendar quarter.