Once you hire a household employee, you take on a new role: household employer.
Whether you've hired a nanny, senior caregiver, housekeeper, or another household employee, you now have important payroll and tax responsibilities. These obligations are commonly known as "nanny taxes," and they apply to families across the country.
The good news? Staying compliant doesn't have to be overwhelming. With the right process in place, you can protect your family, support your employee(s), and avoid costly tax and payroll mistakes.
Use this household employer checklist to make sure you're covering the essentials in 2026.
Step 1: Obtain a Federal Employer Identification Number (EIN)
Before you can legally report household employment taxes, you'll need a Federal Employer Identification Number (EIN) from the IRS.
Checklist
□ Apply for an EIN with the IRS
□ Use your EIN—not your Social Security number—for household employment tax filings
□ Keep your EIN confirmation in your household employment records
Step 2: Confirm Proper Worker Classification
One of the most common household employment mistakes is misclassifying a worker as an independent contractor.
In most cases, if you control when, where, and how the work is performed, your worker is considered your employee—not an independent contractor.
Checklist
□ Review IRS and Department of Labor guidelines
□ Determine whether your worker should be classified as an employee
□ Avoid issuing Form 1099 to workers who meet employee criteria
□ Document your classification decision
Step 3: Register as a Household Employer in Your State
Most states require household employers to register for unemployment insurance and other payroll tax programs.
Checklist
□ Register with the appropriate state agencies
□ Obtain state unemployment insurance account numbers
□ Review state income tax withholding requirements
□ Determine whether workers' compensation coverage is required
□ Check for any local payroll tax obligations
Step 4: Complete New Hire Paperwork
Proper documentation helps establish compliance from day one.
Checklist
□ Have your employee complete Form I-9
□ Verify employment eligibility documentation
□ Have your employee complete Form W-4
□ Collect any required state withholding forms
□ Submit new hire reporting information to your state
□ Create a written work agreement outlining pay, schedule, and expectations
Step 5: Set Up Household Payroll
A reliable payroll process helps ensure accurate wages and tax calculations throughout the year.
Checklist
□ Establish a regular pay schedule
□ Track hours worked
□ Track overtime when applicable
□ Calculate payroll taxes correctly
□ Withhold employee taxes as required
□ Pay the employer portion of Social Security and Medicare taxes
□ Maintain accurate payroll records
□ Pay employees through payroll rather than "off the books"
Step 6: Understand Wage and Labor Law Requirements
Household employees are often protected by federal, state, and local labor laws.
Checklist
□ Verify applicable minimum wage requirements
□ Review overtime rules at the federal and state level
□ Understand meal and rest break requirements
□ Review paid sick leave obligations
□ Check state and local paid family leave and retirement programs
□ Stay informed about any domestic worker protections in your area
Step 7: Pay and File Employment Taxes
Household employers are responsible for reporting and paying required payroll taxes.
Checklist
□ Make required federal tax payments
□ Submit state payroll tax filings
□ File state unemployment tax returns
□ Track tax payment deadlines
□ Prepare year-end payroll reporting
□ Retain proof of tax payments
Step 8: Prepare Year-End Forms
January is one of the most important months for household employers.
Checklist
□ Issue Form W-2 to employees by the required deadline
□ File Form W-2 with the Social Security Administration
□ Complete Schedule H with your personal federal tax return
□ Verify employee information before filing
□ Keep copies of all year-end forms
Step 9: Maintain Organized Records
Good recordkeeping can make tax filing easier and help support compliance if questions arise later.
Checklist
□ Retain payroll records
□ Keep employee forms and tax documents
□ Save timesheets and pay records
□ Maintain tax payment confirmations
□ Store records securely
□ Keep records for at least four years after filing
Step 10: Review Your Compliance Annually
Employment laws and tax requirements can change from year to year.
Checklist
□ Review federal household employment updates
□ Check state labor law changes
□ Confirm payroll tax rates and thresholds
□ Update employee records as needed
□ Evaluate whether your payroll process is still meeting your needs
Household Employment Doesn't Have to Be Complicated
Many families start out thinking they can handle household payroll and taxes on their own. Then they discover the number of federal, state, and local requirements involved.
The reality is that household employment compliance is manageable when you have the right support. Accurate payroll, timely tax filings, and proper recordkeeping help create a positive employment experience for both families and employees.
Let HomeWork Solutions Handle the Details
For more than 30 years, HomeWork Solutions has helped families navigate household payroll, tax, and HR compliance with confidence. From payroll processing and tax filings to year-end forms and ongoing support, our team makes household employment easier and less stressful.
Following these 10 steps can help you stay compliant as a household employer. Or, you can leave the work to us. HomeWork Solutions manages household payroll, tax filings, and compliance requirements from start to finish, giving families confidence that everything is being handled correctly. Contact us today for a complimentary consultation.