If you're hiring a nanny, senior caregiver, or other household employee, you're not just providing a paycheck; you’re also responsible for certain tax withholdings. In 2026, if you pay a household employee more than $3,000, you're required to withhold Social Security and Medicare taxes (FICA) from their wages.
While you're not required to withhold federal income taxes, it's considered best practice to do so. Your employee will still owe these taxes, and having them withheld from each paycheck—rather than paying quarterly or annually makes budgeting much easier for most workers.
Whether you're a household employer or a newly hired employee, understanding Form W-4 is key to avoiding tax-time surprises. Here’s what you need to know.
What Is a W-4 Form?
The W-4 form, officially titled “Employee’s Withholding Certificate,” tells an employer how much federal income tax to withhold from an employee’s paycheck.
The form considers:
- The employee’s filing status
- Dependents
- Any other income or deductions
- Whether the employee wants extra withholding
Why it matters: If too little tax is withheld, the employee may owe the IRS at tax time. If too much is withheld, they’re essentially giving the government an interest-free loan that will be refunded to them when they file their return.
What Changed with the W-4 Form in 2020?
Before 2020, employees claimed "allowances" to adjust withholding. That changed with the 2017 Tax Cuts and Jobs Act, which eliminated personal exemptions.
The IRS released a redesigned W-4 in 2020 that:
- Removed allowances entirely
- Added specific steps for entering dependents, additional jobs, and deductions
- Encouraged use of the IRS Tax Withholding Estimator for greater accuracy
What’s New on the W-4 for 2026?
The IRS routinely updates forms for clarity and to reflect tax law changes. For 2026, here’s what’s new:
- Step 3(a) and 3(b): The Child Tax Credit and the Credit for Other Dependents are now split into separate lines for better clarity.
- Tax-Exempt Checkbox: A new checkbox between Steps 4 and 5 lets employees easily certify if they are exempt from withholding. This is only applicable to a select few, so make sure you qualify before checking. See page 2 of the W-4 form.
- Expanded Deductions Worksheet: Reflects changes from recent legislation—especially important if an employee plans to itemize.
Download the latest W-4 directly from the IRS
Do Household Employees Need to Fill Out a W-4?
Yes! Every employee you hire should complete a W-4 before they begin working. This helps you, as the employer, withhold the correct amount of federal income tax.
Information Included on the W-4:
- Filing status (Single, Married Filing Jointly, etc.)
- Whether they have multiple jobs or a working spouse
- Any dependents or tax credits
- Estimated deductions beyond the standard deduction
- Optional extra withholding
Tip from HomeWork Solutions: If you’re managing household payroll yourself, make sure to get this form upfront. If you're using a payroll service (like ours), we’ll help guide you through compliance from day one.
Do You Need to Update the W-4 Every Year?
Not necessarily. Once it’s on file, it stays in effect until the employee submits a new one. However, life changes, like marriage, divorce, having a child, or picking up an additional job might require updates to the W-4 to avoid withholding surprises.
Best practice: Encourage your household employee to review their W-4 annually or whenever their personal or financial situation changes.
How to Fill Out a W-4 — A Step-by-Step Overview
Here’s a quick breakdown of the 5-step process:
- Step 1: Enter personal information (name, address, SSN, filing status)
- Step 2: Account for multiple jobs or a working spouse (if applicable)
- Step 3: Claim dependents (if applicable)
- Step 4: Add other income, deductions, or extra withholding
- Step 5: Sign and date
Your employee can submit a new W-4 any time during the year—not just when starting a new job.
What About State Income Tax?
The W-4 covers federal income tax only. Most states require their own withholding forms. If you live in a state with income tax, make sure your employee also completes the appropriate state withholding form.
States without state income tax:
- Alaska
- Florida
- Nevada
- New Hampshire
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
Stress-Free Payroll for Household Employers
Handling tax forms like the W-4 might feel intimidating, but you're not alone. At HomeWork Solutions, we specialize in simplifying household employer tax compliance and payroll; so you can focus on your family, not forms.
We’ll:
- Handle local state and federal withholding
- File and pay all employment taxes on your behalf
- Provide year-end W-2s for your employee
Need help managing payroll for your household employee?
Let’s talk. Schedule a free consultation or get started with our household payroll service today.