Tax Year 2025

Do I owe household employment tax for my nanny?

Your actual return

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If you paid a nanny, senior caregiver, or housekeeper directly (not through an agency that employs them), you may be their employer in the IRS's eyes — which means Social Security, Medicare, and possibly unemployment tax obligations, reported on Schedule H with your personal return instead of a separate business filing. This one catches families off guard every year: paying a household worker in cash "under the table" doesn't make the tax obligation go away, it just means it hasn't been paid yet.

When it applies

If you paid any one household employee (a nanny, housekeeper, or senior caregiver) cash wages of $2,800 or more in 2025, you owe Social Security and Medicare tax on those wages, reported on Schedule H with your Form 1040 - not a separate business return. Paying $1,000 or more in any calendar quarter also triggers federal unemployment tax.

A real example

Paying a nanny $15,000 in cash wages for 2025 means $1,860 in Social Security tax plus $435 in Medicare tax - $2,295 total household employment tax owed with your personal return.

This is on top of whatever the employee's own share would be if you withhold it from their pay rather than covering it yourself.