Nanny Share Taxes 2026: Payroll for Two Families

Nanny share taxes come down to one rule: each family is its own employer. Two families can split one nanny's time and cost, but for payroll and taxes you don't combine anything. Each family pays its part of the wages, withholds and pays its own taxes, gets its own EIN, and gives the nanny its own W-2.

This guide walks through who files what, a worked example with real 2026 numbers, how to split a shared rate and a one-child rate, how to enter it in payroll, and the overtime question most shares hit sooner or later.

Who is the employer in a nanny share?

Both families are. Each family that directs the nanny's work with its own children is that nanny's employer for the wages it pays. The IRS decides who the employer is by who controls the work:

"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."

IRS, Publication 926 (2026), Do You Have a Household Employee?

In a share, each family decides how its own child is cared for, sets expectations, and pays for that care. That is control, so each family is an employer. Naming one family the "lead" doesn't change who directs each child's care, so it doesn't make the other family any less of an employer.

How the $3,000 threshold works for each family

Each family counts only what it paid, not the nanny's combined pay. For 2026, a family owes Social Security and Medicare tax once it pays the nanny $3,000 or more in cash wages for the year. The IRS phrases every test per employer:

"Pay cash wages of $3,000 or more in 2026 to any one household employee. Withhold and pay social security and Medicare taxes."

IRS, Publication 926 (2026), Table 1

Federal unemployment tax (FUTA) has its own test: $1,000 or more in cash wages in any calendar quarter of 2025 or 2026. Many shares clear both for both families, but not always:

State unemployment tax has its own thresholds, which vary by state. Your state's household employer guide lists them.

A worked nanny share example with 2026 numbers

In a common setup, the nanny earns $30 an hour while caring for both families' children together, and each family pays half: $15 an hour. On days when only Family A's child is there, Family A pays a one-child rate of $22 an hour.

In a typical week the nanny works 40 hours: 32 hours with both children and 8 hours with Family A's child alone.

Social Security is 6.2% and Medicare is 1.45%, each for employer and employee, which is where the 7.65% comes from. The FUTA line assumes each family pays its state unemployment tax on time and doesn't live in a credit reduction state; the IRS allows "a credit of up to 5.4% against the FUTA tax, resulting in a net tax rate of 0.6%," and a family that pays its state late, or pays wages in a credit reduction state, owes more. Family A's figures are rounded because payroll rounds each paycheck to the cent, so the W-2 total can differ by a few cents. State unemployment tax depends on your state and your rate, so it isn't in the table.

Your nanny doesn't need federal income tax withheld unless they ask and you agree, and each family makes that choice for its own paycheck.

How to enter a nanny share in payroll

Each family runs its own payroll for its own hours. In NannyKeeper, a family's half of the shared rate is the nanny's regular rate, and the one-child hours go in as additional hours at their own rate. Using the example above:

1. Set the hourly rate to your half. On your nanny's employee record, the Hourly Rate is your share of the shared rate. Both families enter $15.
2. Add the one-child hours first. On the hours step of your payroll, Family A chooses + Add overtime, paid time off, bonus or other pay, opens Extra pay, and picks + Add additional hours (for nanny-shares or weekend rates). It enters 8 in Additional hours and $22 in Rate for those hours.
3. Then set Hours to the total the nanny worked for you. Hours counts every hour, the additional ones included. Family A sets it to 40 (32 shared plus 8 alone). Family B, with no additional hours, just enters 32.
4. Check the total before you approve. Family A's gross should be 32 × $15 plus 8 × $22, or $656. If Hours shows 48, the additional hours were added on top of hours you'd already entered: change Hours back to 40 and the gross drops to $656.

Those additional hours are taxed exactly like regular wages, and they print on the nanny's pay stub as their own Additional Hours line with the rate shown. The next payroll starts with the same additional hours and rate filled in, so a share that runs the same schedule every period only needs a check. If your nanny tracks time in NannyKeeper, Hours comes from the timesheet instead and the additional hours start empty, so add them again each payroll and then set Hours back to the tracked total.

If your state's minimum wage is higher than your half of the shared rate, the app shows your state's minimum next to the rate you enter. It's a reminder, not a block, and it can't see what the other family pays. The Department of Labor's proposed joint employer rule would let each joint employer count the other's payments toward minimum wage and overtime.

If only one family uses NannyKeeper, that's fine. Each family's payroll stands on its own; the other family runs theirs however they choose.

Overtime in a nanny share

Plan as though the nanny's hours for both families add up, because a share looks like the arrangement the Department of Labor's proposed joint employer rule describes. The proposal, published April 23, 2026, puts it this way:

"... if the employers are sufficiently associated with respect to the employment of the employee, they are joint employers and must aggregate the hours worked for each other with respect to the employee for purposes of determining compliance with the FLSA. The employers will generally be sufficiently associated if: (1) There is an arrangement between them to share the employee's services ..."

U.S. Department of Labor, Joint Employer Status Under the FLSA, proposed rule, 91 FR 21878 (2026), proposed 29 CFR 791.120(a)

That rule is proposed, not final, and no joint employer regulation is in force today. The proposal doesn't mention nannies, and it says the answer "depends on all of the facts and circumstances." Two families who agree to split a nanny's week still look a lot like an "arrangement between them to share the employee's services," so the safe plan is to count the nanny's week as one week. Under federal law, a nanny who works more than 40 hours in a workweek is owed at least 1.5 times the regular rate for the extra hours, and the overtime rule covers domestic service "in one or more households." Some states set their own rules; our nanny overtime guide covers them, including the live-in exception.

Shared hours happen once. If the nanny is on duty with both children together from 8 to 5, that's 9 hours worked, even though two families each pay for them. A week of 45 shared hours is 5 hours over 40, not 50.

When every hour is shared, each family entering the full week works. NannyKeeper works out overtime on the hours each family enters. If the nanny works 45 hours with both children, each family enters 45 hours at $15, and each payroll pays 40 × $15 plus 5 × $22.50, or $712.50. Together that's $1,425, which is 40 hours at the $30 combined rate plus 5 hours at $45, time and a half of the combined rate. The proposed rule lets each family count what the other family paid toward that total.

When one family's solo hours push the week past 40, agree on it first. Each family's payroll sees only its own part of the week, so neither one knows the other's hours took the nanny over 40. Families usually handle it one of three ways:

• Cap the week at 40. Plan shared and solo hours so the total never goes over.
• Whoever adds the hours pays the premium. If Family A's solo afternoon is what takes the week past 40, Family A pays the overtime.
• Split it by hours used. Each family pays a share of the premium in proportion to its hours that week.

Write down which one you chose before the first week. If the numbers for a particular week aren't obvious, our support team can help you work them out before you run payroll.

Overtime pay can also matter on your nanny's own tax return; see our guide to the overtime deduction for nannies.

Two W-2s and two Schedule Hs

Your nanny gets one W-2 from each family, and each family files its own Schedule H. Each W-2 shows only that family's wages and withholding:

"File a separate 2026 Form W-2 for each household employee to whom you pay either of the following wages during the year. Social security and Medicare wages of $3,000 or more. Wages from which you withhold federal income tax."

IRS, Publication 926 (2026), Form W-2

For 2026 wages, each family gives the nanny its own W-2 by February 1, 2027, and each family files its own Schedule H with its 2026 return, due April 15, 2027. In the example, Family A's W-2 shows $34,112 and Family B's shows $24,960. The nanny reports both on their own return, $59,072 in total. Our W-2 guide for household employers and Schedule H guide walk through each form.

Each family needs its own EIN and state account

Each family needs its own Employer Identification Number, because the IRS ties the EIN to the forms each employer files: "You must include your EIN on the forms you file for your household employee." You can't share one, and you don't need to wait for it to start paying your nanny. Our EIN guide covers the free IRS application.

Once a family meets its state's thresholds, it registers with the state for unemployment tax and, where the state requires it, withholding. Two families in the same state that both register have two separate state accounts.

Nanny shares in Washington

Washington's Department of Labor & Industries (L&I) applies the joint employer doctrine to the state Minimum Wage Act, which covers minimum wage, overtime and paid sick leave:

"An employee may have more than one employer under the Minimum Wage Act. Each 'employer' is equally responsible for the obligations under the Act because the Washington State Supreme Court has adopted the 'joint employer doctrine.'"

Washington L&I, Administrative Policy ES.A.14, Minimum Wage Act: Employment Relationships

ES.A.14 doesn't mention nannies or households, so it doesn't settle whether two particular families are joint employers. It weighs factors such as who controls and supervises the work, who sets the pay rate, who can hire or fire, and who runs payroll. In most shares both families do most of those things together, which points toward joint employment. Under the policy, joint employers are "responsible both individually and jointly," so either family could be asked to cover the whole week's overtime or sick leave.

Starting July 1, 2027, Washington requires a written agreement. Substitute House Bill 2355 (Chapter 15, Laws of 2026) covers most people paid for four or more hours in a month to work in a private home as a nanny or child care provider (irregular babysitting and family members are excluded):

"A hiring entity shall specify the terms for a domestic worker's position or services and the domestic worker's rate of pay in a written agreement."

Washington State Legislature, SHB 2355, Chapter 15, Laws of 2026, Sec. 3(1)

The law defines a hiring entity as any person or group "that provides payment to a domestic worker," so each family that pays the nanny fits it. The law also directs L&I to publish a model written agreement. For more on Washington's other household employer rules, see our Washington nanny tax scenarios.

Put the nanny share in writing

A written agreement keeps the tax side clean, and in Washington it will soon be required. Our nanny contract is a good starting point. For a share, make sure it covers:

• Each family's rate for shared hours and any one-child rate
• The usual schedule, and which hours are shared or solo
• How overtime is handled if the week goes over 40
• Who pays for sick days, holidays and vacation, and at what rate
• How much notice a family gives before leaving the share (in Washington from July 1, 2027, at least two weeks in writing, or severance)
• What happens to the nanny's hours and pay if one family leaves

Common nanny share tax mistakes

One family handles all the paperwork. Each family is an employer for the wages it pays, so each files its own Schedule H and W-2. A family that skips its own filing owes the tax anyway.

Putting all the wages on one W-2. The W-2 reports what that employer paid. One W-2 for $59,072 from one family misstates both families' taxes.

Treating 25 hours plus 25 hours as no overtime. If those are separate hours, the nanny worked 50 hours that week. Plan for the extra 10 before it happens.

Counting shared hours twice. The opposite mistake: 40 hours caring for both children together is 40 hours, not 80.

Guessing the one-child rate at payroll time. Agree on it in writing so both families' payrolls stay consistent week to week.

When one family leaves the share

The departing family still owes the nanny a W-2 for the year, by the usual February 1 deadline, if it paid $3,000 or more or withheld federal income tax, and it files its Schedule H for that year. In Washington from July 1, 2027, a family ending the job must give at least two weeks' written notice (four weeks for a live-in nanny) or pay severance in place of it, with some exceptions. The remaining family keeps running its own payroll as before. If the nanny's hours with the remaining family go up, update the pay rate and hours in that family's payroll from the first week they change. A new family joining the share gets its own EIN and state accounts and starts its own payroll; nothing carries over from the family that left.

FAQ

Do both families in a nanny share pay taxes?

Yes. Each family is a separate employer and pays employment taxes on the wages it pays. For 2026 that's 7.65% for Social Security and Medicare once a family pays $3,000, plus federal and state unemployment tax where each family meets the test.

Can one family pay the nanny and have the other family reimburse them?

We don't recommend it. It blurs which wages belong to which family, and each family's W-2 and Schedule H are meant to show what that family paid. Each family paying its own part directly keeps the two sets of forms easy to line up.

How do we split the nanny's pay in a nanny share?

A common split is to share the shared rate evenly and add a one-child rate for hours when only one family's child is there. In payroll, each family's regular rate is its half of the shared rate, and one-child hours go in as additional hours at the higher rate.

What if one family pays the nanny less than $3,000?

That family doesn't owe Social Security or Medicare on those wages and, unless it withheld federal income tax, doesn't file a W-2. It still checks the $1,000-a-quarter federal unemployment test and its state's rules.

Does a nanny share with three families work the same way?

Yes: three employers, three EINs, three W-2s and three Schedule Hs. Overtime planning matters more, because three families' hours are harder to keep under 40.

Related guides

• Nanny overtime rules
• Nanny contract essentials
• How to pay a nanny legally