Can You Pay Your Nanny Through Venmo or Zelle?

You Venmo your nanny $650 every Friday. It's quick, easy, and you both get a notification. Done, right?

Not quite. Sending money through Venmo, Zelle, or Cash App is a perfectly fine way to deliver wages — but it doesn't handle the tax part. And that's the part that matters.

The Short Answer

Yes, you can pay your nanny through Venmo, Zelle, Cash App, or PayPal. The IRS doesn't care how you send the money — it cares how much you send and whether you handle the taxes.

IRS Publication 926 defines "cash wages" as wages paid by "check, money order, etc." Digital transfers fall squarely in the "etc." Using a payment app doesn't change:

• Your obligation to withhold Social Security and Medicare
• Your employer tax share (7.65%)
• Your W-2 and Schedule H filing requirements
• Your state unemployment tax registration

A payment app is a money transfer tool, not a payroll system. It solves the delivery problem but none of the tax problems.

What Venmo and Zelle Don't Do

Here's what a payroll system handles that payment apps can't:

When you Venmo your nanny $650, you're sending $650. But what should have happened is: $780 gross pay → minus $59.67 FICA → minus $70.33 federal withholding → equals $650 net pay. The app doesn't make that distinction.

The 1099-K Confusion

You may have heard that payment apps now report transactions to the IRS. Here's what's actually going on — and why it doesn't apply to nanny wages.

Current rules (2026)

The One Big Beautiful Bill Act restored the original 1099-K threshold: $20,000 and 200+ transactions per year. The lower $600 threshold that was proposed years ago was repealed and never took effect.

Why it doesn't matter for nanny pay

1099-K is for payments received for goods and services — think freelancers, eBay sellers, Etsy shops. It's issued by the payment platform to the recipient.

Your nanny is your employee, not a freelancer. The correct form is a W-2, issued by you. Whether you pay through Venmo or write a check, you're still responsible for the W-2.

Your nanny is almost certainly an employee, not an independent contractor. The IRS is clear about this — if you control when, where, and how the work is done, the worker is your employee. See our employee vs. contractor guide for the full breakdown.

The "friends and family" trap

On Venmo and PayPal, you can tag payments as "friends and family" or "goods and services." Some families tag nanny payments as personal to avoid triggering 1099-K reporting.

This doesn't help:

• You still owe employment taxes regardless of the tag
• Regular, round-number transfers ($650 every Friday) look like salary payments to the IRS no matter how they're categorized
• The IRS can cross-reference Venmo transaction patterns with your tax return

Zelle note: Zelle facilitates bank-to-bank transfers and never issues 1099-K forms to anyone, regardless of amount. But again, this doesn't change your employment tax obligations.

The Real Risks of Paying Without Payroll

Sending money through an app without handling taxes isn't just a technical gap — it's a financial risk.

How families get caught

• Nanny files for unemployment. This is the most common trigger. When the relationship ends, the nanny files a claim, the state cross-references with the IRS, and both agencies notice no employment taxes were paid.
• Nanny reports the income. Even without a W-2, your nanny may report wages on their tax return. The IRS sees income reported by the nanny but no corresponding employer filing.
• Audit patterns. Regular, same-amount transfers to the same person every week look like wages — and the IRS can request transaction records from payment platforms.

What it costs

For a nanny earning $40,000/year, the combined back taxes, penalties, and interest can easily exceed $10,000 after just two years.

Beyond the financial cost: your nanny loses Social Security credits, can't collect unemployment if they leave, and can't verify income for a mortgage or apartment.

Here's the full picture of what your nanny misses out on:

Pay Stub Requirements

Many states require employers to provide itemized pay stubs showing gross pay, deductions, and net pay. A Venmo transaction receipt doesn't count.

States with pay stub requirements include California, New York, Massachusetts, Colorado, Connecticut, and many others. Penalties for not providing them range from $50 to $100 per violation in California, and can add up quickly. Check your state's requirements →

Even in states without strict requirements, pay stubs protect both you and your nanny by creating a clear record of what was paid and what was withheld.

How to Do It Right

You have two options for making this work properly:

Option 1: Use a payroll service + any payment method

Use a payroll service to calculate taxes, generate pay stubs, and produce year-end forms. Then pay the net amount however you want — Venmo, Zelle, check, direct deposit, cash.

Cost: $10–18/month. Compare that to the alternatives →

Option 2: Direct deposit through payroll

Skip the payment app entirely. NannyKeeper offers built-in direct deposit starting at $6/transfer — the money goes straight from your bank to your nanny's bank, with all taxes calculated and documented automatically.

No Venmo. No manual transfers. No forgetting.

Try NannyKeeper free →

If You've Been Paying Through Apps Without Taxes

If you've been Venmoing your nanny without handling payroll taxes, don't panic — but don't wait, either. The longer you wait, the more you owe in penalties and interest.

Our guide on catching up on back nanny taxes walks through the process step by step. The short version:

1. Start proper payroll now (going forward)
2. Calculate what you owe for past wages
3. File the necessary forms and pay the back taxes
4. The IRS generally treats voluntary disclosure more favorably than getting caught

FAQ

Is it legal to pay my nanny through Venmo?

Yes. There's no law against using Venmo, Zelle, Cash App, or any other payment method to deliver wages. The issue isn't how you pay — it's whether you handle employment taxes (FICA withholding, W-2, Schedule H). A payment app doesn't replace a payroll system.

Will Venmo report my nanny payments to the IRS?

Not as employee wages. Venmo may issue a 1099-K to the recipient for payments tagged as "goods and services" above the $20,000/200 transaction threshold — but this doesn't apply to personal payments. More importantly, nanny wages should be reported on a W-2 that you issue, regardless of how Venmo categorizes the transfer.

Does Zelle report payments to the IRS?

No. Zelle facilitates bank-to-bank transfers and does not issue 1099-K forms. But your employment tax obligations exist regardless of whether the payment platform reports anything.

Can I just give my nanny a 1099 instead of a W-2?

No. Your nanny is an employee, not an independent contractor. Issuing a 1099 instead of a W-2 is misclassification and can result in back taxes, penalties, and interest — for both of you. Read our employee vs. contractor guide for why nannies are almost always employees.

What if my nanny prefers Venmo?

That's fine — just use a payroll service alongside it. Run payroll through NannyKeeper (or any service) to calculate taxes and generate pay stubs, then send the net pay amount through Venmo. You get proper documentation; your nanny gets paid the way they prefer.

Do I need to withhold taxes if I pay under $3,000/year?

If you'll pay a single household employee less than $3,000 in the full calendar year (2026 threshold), you don't owe FICA taxes. But if you know you'll cross $3,000, start withholding from the first paycheck — it's much easier than catching up later. Use our calculator to check.