How to Pay Your Nanny Legally in 2026

You decided to pay your nanny on the books. That's the right call—and honestly, it's not as complicated as it sounds.

Here's exactly how to do it, from your very first step to the W-2 you'll hand over in January.

Step 1: Get an EIN

An EIN (Employer Identification Number) is the first thing you need. It's the tax ID you'll use on every employment form: W-2s, Schedule H, quarterly deposits, all of it.

The good news: it's free and takes about 5 minutes on the IRS website. You don't need an accountant, a lawyer, or anything other than your Social Security number.

See our step-by-step EIN guide for the exact clicks, or go directly to irs.gov/ein and select "Hired household employees" when asked why you need one. You'll get your EIN immediately on screen.

Step 2: Have Your Nanny Fill Out a W-4

Before the first paycheck, your nanny needs to complete a federal W-4 form. This tells you how much federal income tax to withhold from their pay.

A few things to know:

• The W-4 is your nanny's form to fill out, not yours
• Keep the signed copy in your records—you don't send it to the IRS
• Some states have their own withholding form too (check your state's requirements)
• Your nanny might claim "exempt" if they expect to owe no federal income tax—that's valid, just keep it on file

You'll also need them to complete an I-9 to verify their right to work in the U.S. That one's required by federal law too.

Step 3: Figure Out What You Owe

This is the part that looks scary but follows a simple formula. As a household employer, you're responsible for two types of taxes.

FICA (Social Security and Medicare)

FICA is split evenly between you and your nanny:

So on a $1,000 paycheck, you pay an extra $76.50 out of pocket, and you withhold $76.50 from your nanny's pay. The IRS collects a combined $153.

FUTA (Federal Unemployment Tax)

FUTA is 0.6% on the first $7,000 of wages per employee per year, so a maximum of $42/year. This one's entirely on you. Nothing gets withheld from your nanny's pay.

State Unemployment (SUTA)

Every state has its own unemployment tax for household employers. Rates vary, but most fall between 1–4% on the first $7,000–$40,000 of wages. Check your state to find your rate and wage base.

Use our calculator to see your exact numbers based on your nanny's salary and your state:

Step 4: Set Up a Pay Schedule

Pick a schedule and stick to it—biweekly (every two weeks) is most common for nannies.

Each payday, you'll track three numbers:

1. Gross pay — what you agreed to pay before taxes
2. Withholdings — the 7.65% FICA you deduct from your nanny's check, plus any federal/state income tax withholding
3. Net pay — what actually hits their bank account

A quick example for a $1,000 gross paycheck:

You can track this in a spreadsheet, or let a payroll service do it automatically.

One note: if you promised your nanny a specific take-home amount ("$800 a week, no matter what"), you'll need to gross up their pay so the withholdings work out. This is called a "net pay arrangement" and the math is a little more involved—our calculator handles it.

Step 5: Pay Taxes Quarterly

You don't pay employment taxes once a year. The IRS expects quarterly deposits, and most states do too.

Federal: 1040-ES with Schedule H

For household employers, federal taxes work differently than for business employers. Rather than depositing to the IRS every quarter separately, you pay estimated taxes using Form 1040-ES. This covers your share of FICA, your nanny's withheld FICA, any income tax you withheld, and FUTA. It all goes into your personal estimated tax payment.

The 2026 quarterly deadlines:

Pay at IRS Direct Pay (free, no enrollment needed) or by mailing a check with your Form 1040-ES voucher.

State Unemployment (SUTA)

Most states require quarterly SUTA deposits, paid through your state's labor department portal. A few states fold it into your personal estimated payments. Check your state for the specifics.

Missing a quarterly payment won't immediately cause disaster, but the IRS will charge interest and a small penalty on the underpayment. It's easier to pay on time.

Step 6: File Year-End Forms

Once the calendar year wraps up, two things need to happen before Tax Day.

W-2 — Due January 31

You're required to give your nanny a W-2 showing their total wages and withholdings for the year. You also send a copy to the Social Security Administration.

Deadline: January 31 (for both the employee copy and the SSA filing).

Our W-2 guide for household employers walks through every box.

Schedule H — Due April 15

Schedule H is a one-page form you attach to your personal tax return (Form 1040). It's where you report all your household employment taxes for the year and pay any remaining balance.

Deadline: April 15 (when your 1040 is due, or October 15 if you file an extension—but taxes are still owed by April 15 even if you extend).

Read our Schedule H guide if you want to understand exactly what goes in each line.

The Easy Way

If manually tracking pay periods, calculating withholdings, remembering quarterly deadlines, and generating W-2s sounds like a lot... it kind of is. That's what NannyKeeper handles.

For $10/month, NannyKeeper calculates every paycheck automatically, tracks quarterly taxes, sends deadline reminders, and generates your W-2 and Schedule H when January comes. You just review and submit.

It's not a hard sell—some families genuinely prefer to run the spreadsheet themselves, and that works fine. But if you'd rather spend that time on something else, we've got it.

FAQ

Can I just pay my nanny in cash?

You can pay in cash—that's legal. But "cash" is the payment method, not an exemption from taxes. You still owe FICA, FUTA, and SUTA on those wages, and your nanny still needs a W-2 at year-end. A paper trail (bank transfers, checks) makes everything easier to document. Read more about the risks of paying informally in our under-the-table guide.

What if I've already been paying without withholding taxes?

You can get compliant going forward, and you have options for prior years too. Some families simply start fresh from today. Others work with a CPA to file late Schedule H returns and request penalty abatement. Our guide to catching up on back nanny taxes covers both paths.

Do I need workers' compensation insurance?

It depends on your state. Several states, including California and New York, require household employers to carry workers' comp regardless of how much they pay. Others only require it above a certain wage level. Check your state's page for the rule where you live.

Is my nanny an employee or an independent contractor?

Almost always an employee. The IRS looks at who controls how, when, and where the work gets done. If your nanny works in your home, on your schedule, caring for your kids—that's an employment relationship. You can't issue a 1099 and call it done. Read our employee vs. contractor guide for the full breakdown.

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Related reading:

• How to Get an EIN for Household Employment
• W-2 Guide for Household Employers
• How to File Schedule H