Hiring a nanny, housekeeper or gardener can significantly ease the burden of childcare and daily chores. However, as a household employer, it’s critical to understand your “nanny tax” obligations.

Hiring a household worker who isn’t an independent contractor may make you liable for federal income tax, Social Security and Medicare (FICA) tax, federal unemployment tax and possibly state tax. In 2024, you must withhold and pay FICA taxes if your worker earns $2,700 or more (increasing to $2,800 in 2025). You pay household worker taxes by increasing your quarterly estimated tax payments or withholding from wages. Employment taxes are then reported on your tax return.

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