The short answer: ask early, ask kindly, and come ready with facts and a solution. Most families aren't trying to cut corners. They just don't know that hiring a nanny makes them a household employer, with payroll and tax responsibilities that come with it.
In 2026, a family who pays one household employee $3,000 or more in wages during the year must withhold and pay Social Security and Medicare taxes on those wages (IRS Publication 926). The IRS treats nannies as employees, not independent contractors, when the family controls what work is done and how it's done. So legal pay isn't a special favor you're requesting. It's the standard.
Your best approach is to frame it as something that protects both of you, bring a simple next step, and let the family know help exists.
Why does being paid on the books matter so much for me?
Cash can feel simpler in the moment, especially when it means a bigger paycheck today. But being paid legally is what builds your safety net. Here's what you get:
- Social Security credits toward retirement and disability. You need 40 credits to qualify for retirement benefits. Cash wages that aren't reported don't count.
- Unemployment between jobs. Nanny jobs end for reasons that have nothing to do with you: kids start school, families move. Reported wages are what make you able to easily collect unemployment benefits in your state.
- Workers' comp if you're hurt on the job. Lifting kids, carrying car seats, slipping on a wet floor. Many states require household employers to carry workers' comp, and it only helps you if you're a documented employee.
- Proof of income. Renting an apartment, getting a car loan, or applying for a mortgage all go more smoothly with a W-2 and pay stubs.
- Health coverage and tax credits. Documented income can help you qualify for savings on a HealthCare.gov marketplace plan, and you may be eligible for the Earned Income Tax Credit, which can put money back in your pocket at tax time.
- Minimum wage applies to nannies. Under the Fair Labor Standards Act (FLSA, the federal law that sets minimum wage and overtime rules), nannies must be paid at least minimum wage for every hour worked. Many states and cities set a higher rate, so check the state minimum wage list.
- Live-out nannies get federal overtime. If you reside in your own home at the end of the day, you're owed time and a half for hours over 40 in a workweek.
- Live-in nannies are different. Federal law exempts live-in nannies hired directly by a family from overtime, but some states, including California and New York, still require it. This is one of those spots where your state rules really matter.
- A 1099 usually isn't right. Nannies are household employees, so a W-2 is the correct form in nearly every case. If a family has been giving you a 1099, it's usually an honest mistake that's fixable.
- During the interview, when the family asks if you have questions.
- When you receive an offer, before you agree to a start date.
- When you're putting together a work agreement, since pay, hours, and how you'll be paid all belong in it.
- Lead with partnership, not accusation. Most families simply didn't know.
- Talk about your whole paycheck. Be clear whether the rate you're discussing is before or after taxes. Always negotiate a gross hourly rate (before taxes), so there are no surprises on payday.
- Offer a next step. Pointing the family to a free resource or consultation turns "this sounds like a lot" into "okay, that's easy."
- Get it in writing. Once you agree, add it to your work agreement.
Legal household payroll: it's worth it: A closer look at each benefit legal pay gives you, from unemployment to health coverage.
What does the law say about my pay?
A few basics are worth knowing before you have the conversation:
Figures like the $3,000 (2026) threshold change most years, so double-check the current numbers on the IRS and SSA sites linked above, or on the HWS blog at the change of year.
When is the best time to bring up legal pay?
The easiest moment is before you accept the job. Some good openings:
Bringing it up early sets a professional tone and shows the family you take the job seriously. It also means everyone starts on the same page instead of untangling things later.
What can I actually say?
You don't need a speech. Try one of these and put it in your own words:
In an interview: "I'm really excited about this role. One thing that's important to me is being paid on the books, with taxes withheld and a W-2 at the end of the year. Is that how you were planning to handle payroll?"
At the offer stage: "Before I say yes, I want to make sure we're both protected. I'd like to be paid legally through payroll. If you haven't set that up before, there are services that handle all of it, and I'm happy to share one."
If they seem unsure: "I get it, it sounds complicated. It turns out there are companies that take care of the whole thing, and some families find the tax breaks cover a good chunk of the cost. Would it help if I sent you some information?"
A few tips that make these conversations go better:
I'm already being paid in cash. How do I bring it up with my current family?
This one can feel more awkward, but it's very doable. You already have a relationship and trust with this family, and that works in your favor.
Pick a calm moment. Not during pickup chaos. Ask if you can set aside 15 minutes to talk about your job.
Keep it about your future, not their past. For example: "I love working with your family and I want to stay for a long time. I've been learning about how important it is for my own retirement and security to be paid on the books. Could we look at switching to payroll going forward?"
Know that it can start now. Moving to legal pay can begin with the next paycheck. If the family has questions about earlier months or years, a household payroll specialist can walk them through their options privately. That part is their conversation to have, and it doesn't need to be solved in yours.
If the answer is no. Give the family an agreed upon amount of time to think and to look into it. If they still won't pay you legally, you get to decide what's right for you. Is it time to move on to a family who will pay you legally? Whatever you decide, make legal pay a requirement for your next job.
Frequently asked questions
Is it illegal to pay a nanny in cash?
Paying in cash isn't the problem. Not reporting it is. Once a family pays $3,000 (2026) or more in a year, they need to withhold and pay Social Security and Medicare taxes and give you a W-2 (IRS Publication 926).
Will I lose money if I get paid on the books?
Your take-home pay may be a little lower, since 7.65% goes to Social Security and Medicare. In return, you build retirement credits, qualify for unemployment, and may be eligible for tax credits that bring money back to you. You may also want to have your income taxes withheld to make tax time easier for you.
Should a nanny get a W-2 or a 1099?
Almost always a W-2. The IRS considers nannies household employees because the family controls the work.
Who is responsible for setting up nanny payroll?
The family, as the employer. You can help by pointing them to a trusted resource, like HomeWork Solutions.
Go deeper
You don't have to figure this out alone, and neither does your nanny family
Asking for legal pay is one of the most professional things you can do for your career. At HomeWork Solutions, we've helped families pay their nannies the right way since 1993, and we talk to both families and nannies every day. If your family has questions, send them our way for a free consultation. A real person will walk them through it, and they'll likely be surprised how simple it can be.