Hiring someone to care for a child at home can bring tax responsibilities that families do not expect. Paying by cash, check, or an app does not determine whether the worker is an employee. Neither does calling the arrangement babysitting or agreeing that the nanny will handle all taxes personally.
The first question is how the work relationship operates. Once that is clear, compare the wages with the federal and California rules. The thresholds are different, and a household can have state reporting duties before federal Social Security and Medicare taxes apply.
Determine Whether You Are the Employer
A household worker generally is your employee when you can control both what work is done and how it is done. A nanny who works in your home according to your care instructions may fit that definition even if the schedule is part time. A written independent-contractor label does not override the actual working relationship.
Someone providing child care in their own home generally is not your household employee. An agency arrangement also needs review: if the agency controls the work and how it is performed, it may be the employer. Merely using an agency to find a nanny does not establish that the agency handles the ongoing employment obligations.
Ask who hires, directs, pays, and can dismiss the worker. Keep the service agreement and any agency explanation of its responsibilities. California classification rules also deserve review. If the facts are unclear, resolve the classification before deciding which tax form to issue.
Check the Federal Wage Thresholds for the Year
For 2026, paying one household employee $3,000 or more in cash wages generally triggers Social Security and Medicare taxes on all covered cash wages paid to that employee during the year. The threshold is not an amount you subtract before calculating the tax. Check the applicable year because this figure can change.
The usual combined Social Security and Medicare rate is 7.65% for the employee and 7.65% for the employer, subject to the Social Security wage limit and additional Medicare rules at higher wages. You generally withhold the employee’s share or choose to pay it yourself. Paying that share yourself can affect the wages reported for income tax purposes.
Federal unemployment tax uses a separate test. For 2026, it generally applies if total cash wages paid to household employees reached $1,000 in any calendar quarter of 2025 or 2026. Family-member and young-worker exceptions can change which wages count. Review each exception carefully rather than treating every relative or student as automatically exempt.
Review California Registration and Payroll Taxes
California generally requires a household employer to register and report after paying $750 or more in total cash wages in a calendar quarter to one or more household employees. Registration is generally due within 15 days after reaching that amount. Do not wait for the federal annual threshold before checking the state requirements.
At $750 to $999.99 in quarterly cash wages, State Disability Insurance withholding and reporting generally apply. Reaching $1,000 in quarterly cash wages generally brings California Unemployment Insurance and Employment Training Tax obligations as well, subject to the applicable exceptions. The state guide explains which wages and workers are covered.
For example, paying a covered nanny $900 during one quarter may create California registration and reporting duties even if annual pay stays below the federal Social Security threshold. A household-employer account can also have continuing filing requirements for quarters with no wages. Keep the account’s filing calendar with the payroll records.
Set Up Records and the Required Forms
Keep a record of each pay date, gross wages, deductions, net payment, and any employer-paid employee taxes. Record hours and the agreed pay arrangement as well. Payment-app history alone may show only the net amount transferred and can make it difficult to reconstruct the correct wage totals.
Household employers who must file federal employment forms need an employer identification number. Form W-2 reports the employee’s wages when required, and household employment taxes generally are reported on Schedule H with the employer’s federal income tax return. Sending a Form 1099 does not replace employee payroll reporting when the worker is an employee.
For 2026 wages, required Forms W-2 and W-3 are due to the Social Security Administration by February 1, 2027, and the employee’s W-2 is due by that date as well. California has its own reports and payment schedule. Federal income tax withholding is generally voluntary for household employment when the employee requests it, and the employer agrees; that does not remove other payroll obligations.
Plan for the Cost Before Filing Season
Include employer payroll taxes in the care budget instead of treating the agreed take-home payment as the entire cost. Review whether additional withholding from your own wages or estimated tax payments can cover household employment taxes due with your return. Waiting until filing can leave a larger balance than expected.
Tax reporting is only part of employing household help. Wage, overtime, recordkeeping, and insurance responsibilities may require a separate review under the applicable employment rules. Keep those questions distinct from whether a particular payment crosses a tax threshold.
LocalTax provides tax preparation and payroll services in Bellflower. Contact LocalTax to discuss the household arrangement and the records needed to review your tax responsibilities. Bring the start date, wage history, agency agreement if any, and prior employer filings so the review covers the full year.
