Considering the Nanny Tax

Paying the nanny tax is not optional.

If you want to employ a nanny to work in your home, the nanny tax will be something to consider. Hiring a nanny or any household employee makes you an employer and, as such, makes you subject to the taxing regulations and responsibilities that govern household employers.

According to the IRS, any nanny who follows your instructions, and who works in your home with tools that you provide (toys, diapers, coloring books), should be taxed by you. This is true even if your nanny works part-time for you and has other employers. It is also true if she lives in your home and receives pay in part through room and board. For these reasons, nannies are considered employees and not independent contractors.

Nanny employers can expect the nanny tax to be about 10% of their nanny’s gross salary. Fortunately, there are tax breaks that can help offset this cost.

Many families find the help of a nanny tax and payroll service invaluable. We recommend as a helpful and reliable nanny payroll and tax service. As nanny payroll and tax specialists, they keep up to date on regulations that affect you as a household employer and help ensure that you are paying your nanny legally and withholding the proper taxes.

During the hiring process, it is important to clarify from the get go if your nanny is quoting her salary requirement in net (after taxes) or gross (before taxes) terms. You can find a net to gross salary calculator at

Having a nanny tax and payroll service provider like GTM Payroll Services to manage your nanny’s payroll and taxes can help simplify the process of paying your nanny legally and complying with the tax rules and regulations that govern household employers. 

Paying and taking care of your nanny’s taxes can be a simple and easy task when you have a professional take care of it for you-and doing so is reasonably priced. Being familiar with tax laws, offering a competitive salary and having a written work agreement can make finding and managing your nanny easier. 

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