Thinking about hiring childcare? The tax implications are completely different depending on whether you hire a nanny or host an au pair.
Here's what you need to know.
Considering a nanny? Learn about nanny taxes and what you'll owe as a household employer.
Nanny Tax Requirements
When you hire a nanny, you're a household employer. That means:
| Requirement | Your Obligation |
|---|---|
| Social Security | Pay 6.2% + withhold 6.2% |
| Medicare | Pay 1.45% + withhold 1.45% |
| Federal unemployment | Pay ~0.6% on first $7,000 |
| State unemployment | Varies by state |
| W-2 | Issue by January 31 |
| Schedule H | File with your tax return |
Total employer cost: roughly 8-10% on top of wages.
Au Pair Tax Requirements
Au pairs come through cultural exchange programs (J-1 visa). The IRS treats them differently:
| Requirement | Your Obligation |
|---|---|
| Social Security | Not required |
| Medicare | Not required |
| Federal unemployment | Not required |
| State unemployment | Usually not required |
| W-2 | Not required |
| 1099 | May be required for stipend |
Au pairs aren't subject to FICA taxes because they're considered cultural exchange participants, not employees.
Why the Difference?
It comes down to visa status and program rules:
Nannies are employees. You control their schedule, tasks, and methods. You pay wages. The IRS treats this as employment.
Au pairs are cultural exchange participants on J-1 visas. Legally, they're here for cultural exchange, not employment. The "stipend" they receive isn't technically wages.
The work might look similar, but the legal framework is completely different.
Au Pair Program Rules
Au pairs come through designated sponsoring agencies. Key constraints:
- Maximum 45 hours/week of childcare
- Must be 18-26 years old
- One year program (can extend to two)
- Host families pay a weekly stipend (~$200/week minimum)
- Host families provide room, board, and educational allowance
These rules are set by the State Department, not the IRS.
Cost Comparison
Let's compare the true costs:
Nanny: $45,000/year wages
| Item | Annual Cost |
|---|---|
| Wages | $45,000 |
| Employer FICA (7.65%) | $3,443 |
| FUTA + SUTA (~1%) | $450 |
| Total cost | ~$48,893 |
Au Pair: Typical program costs
| Item | Annual Cost |
|---|---|
| Agency fee | ~$9,000 |
| Weekly stipend (52 weeks) | ~$10,400 |
| Educational allowance | ~$500 |
| Room & board (imputed) | ~$12,000 |
| Total cost | ~$31,900 |
Au pairs appear cheaper, but remember: 45 hours/week max, and they're typically less experienced.
Tax Forms for Au Pairs
Even without FICA obligations, you may need to handle:
1099-MISC or 1099-NEC Some tax professionals recommend issuing a 1099 for au pair stipends. Others say it's not required. Check with your accountant.
No W-2 Au pairs don't receive W-2s because they're not employees.
Au pair's taxes The au pair is responsible for filing their own taxes on their stipend income. This isn't your obligation.
When Au Pairs Become Employees
An au pair's tax status can change if:
- They stay beyond their J-1 visa term
- They work more than program-allowed hours
- They work for multiple families outside the program
If any of these apply, they may be reclassified as employees with full tax obligations.
Nanny vs Au Pair: Decision Factors
| Factor | Nanny | Au Pair |
|---|---|---|
| Hours flexibility | Unlimited | Max 45/week |
| Experience level | Varies (often high) | Usually limited |
| Tax complexity | Higher | Lower |
| Total cost | Higher | Lower |
| Scheduling control | Full | Limited by program |
| Duration | Ongoing | 1-2 years max |
Which Should You Choose?
Choose a nanny if:
- You need more than 45 hours/week
- You want an experienced caregiver
- You need long-term stability
- Flexibility is important
Choose an au pair if:
- 45 hours/week is enough
- You want cultural exchange for your kids
- Budget is a primary concern
- You're comfortable with less experience
NannyKeeper and Au Pairs
NannyKeeper is designed for household employers with nanny tax obligations. If you have an au pair with minimal tax requirements, you might not need payroll software.
But if you have a nanny—or if you're unsure about your situation—we can help.
FAQ
Can my au pair also babysit for extra pay?
Technically no—extra work outside the program can jeopardize their visa and change their tax status.
What if my au pair stays and becomes a nanny?
Once their J-1 visa ends and they get work authorization (like an H-1B or green card), they become a regular employee with full tax obligations.
Do I need to pay minimum wage for au pairs?
The stipend requirements are set by the State Department, not minimum wage laws. Current minimums are around $200/week.
Ready to simplify nanny taxes?
NannyKeeper handles the calculations, deadlines, and paperwork so you can focus on your family.