The Household Employer: Taxes and Obligations

Part of the Learning Center · included with Baby's First Year

Hiring someone to care for a child at home creates a second identity most families have never held: employer. The IRS calls it a household employer, and the obligations start the moment cash wages cross a single annual threshold. The rules are not complex. They are just unfamiliar. This guide maps the federal requirements, the state layers, the filing mechanics, and the consequences of skipping them. Most of the setup takes an afternoon. Ignoring it can cost years of back taxes, penalties, and interest.

What this guide covers

· The obligation map: what triggers what
· Employee or contractor: why the nanny is almost always an employee
· Getting set up: EIN, Form I-9, and the paper trail
· The taxes: what to withhold and what to pay
· Schedule H and Form W-2: the filing mechanics
· State obligations: unemployment, workers' compensation, and registration
· What misclassification costs
· Payroll services and the ongoing rhythm
· Where the plan comes in

The full guide comes with your plan.

Baby's First Year includes the whole Learning Center, this guide included: the knowledge behind every task on your personalized, dated timeline.

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Sources this guide is verified against

IRS, Publication 926 (2026), Household Employer's Tax Guide: https://www.irs.gov/publications/p926
IRS, Topic No. 756, Employment taxes for household employees: https://www.irs.gov/taxtopics/tc756
IRS, About Schedule H (Form 1040), Household Employment Taxes: https://www.irs.gov/forms-pubs/about-schedule-h-form-1040
IRS, Instructions for Schedule H (2025): https://www.irs.gov/instructions/i1040sh
IRS, Employer Identification Number: https://www.irs.gov/businesses/employer-identification-number
IRS, Instructions for Form SS-4 (12/2025): https://www.irs.gov/instructions/iss4
IRS, Worker Classification 101, Employee or Independent Contractor: https://www.irs.gov/newsroom/worker-classification-101-employee-or-independent-contractor
IRS, Independent Contractor (Self-Employed) or Employee: https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee
IRS, Hiring Household Employees: https://www.irs.gov/businesses/small-businesses-self-employed/hiring-household-employees
IRS, Topic No. 762, Independent Contractor vs. Employee: https://www.irs.gov/taxtopics/tc762
Social Security Administration, Contribution and Benefit Base: https://www.ssa.gov/oact/cola/cbb.html
U.S. Department of Labor, State Unemployment Tax Agencies: https://oui.doleta.gov/unemploy/agencies.asp
IRS Taxpayer Advocate Service, Employee or Independent Contractor, What Are the Tax Implications: https://www.taxpayeradvocate.irs.gov/news/tax-tips/employee-or-independent-contractor-what-are-the-tax-implications/2025/09/

Every figure checked against official sources; last reviewed August 2026. Mothers Plan provides information and organization, not legal, tax, financial, or medical advice.