The first question: agency or direct hire?
How you hired your caregiver determines whether you have tax obligations. This is the single biggest factor.
Hired directly?
You're the employer once you pay $3,000+ in a year.
- Care.com, a friend's referral, Craigslist — all count
- The IRS considers you a household employer
- You owe payroll taxes — we handle the math
Hired through an agency?
Nothing to do. The agency is the employer.
- They run payroll and withhold taxes
- You pay the agency invoice
- No W-2, no Schedule H, no filings
Not sure? If the caregiver sends you an invoice and sets their own schedule, ask the agency whether they handle payroll. If there is no agency, you're the employer.
The caregiver tax breakdown
What you'll owe and who pays what
| Tax | Rate | Who Pays |
|---|---|---|
| 6.2% | Both you and your caregiver | |
| 1.45% | Both you and your caregiver | |
| 6% (0.6% after credit) | You (employer only) | |
| Varies by state | You (employer only) | |
| Based on W-4 | Your caregiver (optional withholding) | |
| State Income Tax | Varies by state | Your caregiver (if applicable) |
Tax benefits you might not know about
Hiring a caregiver comes with real costs — but the tax code offers some relief if you qualify.
Medical expense deduction
Caregiver wages may be deductible as a medical expense if the care is medical in nature (bathing, medication, nursing) and the recipient is your tax dependent.
- Deduction threshold
- 7.5% of AGI
- Claimed on
- Schedule A
- Reduces
- Taxable income
Dependent care credit
If your parent is your dependent, lives with you, and can't care for themselves, you may claim this credit. Both spouses must have earned income.
- Max qualifying expenses
- $3,000
- Credit rate
- 20–35%
- Reduces
- Tax bill directly
Is a family member providing care?
Paying a spouse, child, parent, or sibling to care for a loved one? Different tax rules apply. Some family members are exempt from or — others aren't. The rules depend on the relationship and the age of the caregiver.
See the full family member tax guideHow NannyKeeper handles caregiver taxes
Your family is going through a lot. Taxes shouldn't be the hard part.
Accurate Tax Calculations
Federal, state, Social Security, Medicare—calculated to the penny for your specific situation.
Professional Pay Stubs
Itemized pay stubs your employee can use for apartments, loans, or their own tax filing.
Never-Miss Reminders
Email alerts before every deadline. No more "I forgot it was due."
Built-In Direct Deposit
Funds transfer automatically on payday. No checks to write or bank runs.
We Handle Your EIN
Need an Employer ID Number? We apply with the IRS on your behalf—no forms to navigate yourself.
W-2s & Schedule H
Your W-2s and household employment form, ready to download when tax season arrives.
We handle payroll for all types of household employees
Not sure what you owe in caregiver taxes?
Our free calculator breaks down your federal, state, and obligations based on your caregiver's actual wages. Takes about two minutes, and you don't need to create an account.
Calculate What You OweFree. No signup required.
Hiring a family member as caregiver? See which tax exemptions apply.
Common caregiver tax questions
Yes, if you hire them directly. The IRS considers anyone who works in your home under your direction to be a household employee — that includes home health aides, companions, and live-in caregivers. The key factor is whether you control when, where, and how the work is done. If you hired through an agency, the agency is typically the employer.
Want the full step-by-step guide?
Our complete caregiver payroll guide walks through every step — from deciding whether you need an EIN to filing your year-end taxes.
Read the complete caregiver payroll guide