Families hire help at home in many ways: a full-time nanny, a sitter on Saturday nights, a cleaner every other week, a caregiver for a parent. Some of them are your employees in the IRS's eyes and some aren't, and the answer decides whether you have payroll taxes and a Form W-2 to deal with. This post sets out the definition and how it applies to the common cases.
What is a household employee?
IRS Publication 926 (2026) says you have a household employee if you hired someone to do household work and that worker is your employee. Household work is work done in or around your home. The worker is your employee if you can control not only what work is done, but how it is done.
Two details catch people out. It doesn't matter whether the work is full time or part time. And it doesn't matter that you found the worker through an agency or from a list an agency or association provided: if you are the one directing the work, you are the employer.
Who counts: nanny, babysitter, cleaner, caregiver
Publication 926 lists these as examples of household workers: babysitters, butlers, caretakers, cooks, domestic workers, drivers, health aides, housecleaning workers, housekeepers, maids, nannies, private nurses and yard workers. Each is your employee only when the control test is met.
| Worker | Usually your employee when | Usually not your employee when |
|---|---|---|
| Nanny | You hire them and set the schedule, duties and house rules | A nanny agency employs them and directs the work |
| Babysitter | You hire them directly and tell them what to do and how | They run a babysitting business serving the public with their own methods |
| Cleaner or housekeeper | You hire one person and direct how and when they clean | A cleaning company sends staff and controls the work |
| In-home caregiver or health aide | You hire and direct the caregiver yourself | A home care agency provides and directs the caregiver |
| Yard worker | You hire someone and direct the work | They run a lawn care business with their own helpers, tools and methods |
Agency workers and self-employed workers
If an agency provides the worker and controls what work is done and how it is done, the worker isn't your employee. The agency is the employer and runs payroll; you pay its invoice.
If only the worker controls how the work is done, the worker is self-employed. Publication 926 gives the example of a lawn care business that offers its services to the public, hires its own helpers, provides its own tools and supplies, and instructs the helpers how to work: neither the owner nor the helpers are your employees. Calling a worker a contractor in an agreement doesn't change the answer if you really direct the work.
When a household employee means payroll taxes (2026)
Having a household employee doesn't always mean tax. The federal taxes start at set amounts of cash wages.
| Tax | Applies when you pay | What you do |
|---|---|---|
| Social Security and Medicare | $3,000 or more in cash wages to one employee in 2026 | Withhold 7.65% from their wages and pay 7.65% yourself |
| Federal unemployment (FUTA) | $1,000 or more in total cash wages in any calendar quarter of 2025 or 2026 | Pay FUTA yourself on the first $7,000 per employee |
| Federal income tax | Only if the employee asks and you agree | Withhold from their Form W-4 |
If any of these apply, you need an employer identification number, you report the taxes on Schedule H with your Form 1040 (due 15 April 2027 for 2026), and you give the employee a Form W-2 by 1 February 2027. If you pay an employee less than $3,000 in cash wages in 2026, none of those wages are Social Security or Medicare wages, so neither of you owes those taxes on them. The Social Security part stops at the 2026 wage base of $184,500.
Family members and young workers
Some wages don't count toward the Social Security and Medicare threshold, even when the worker is your household employee:
- Wages you pay your spouse.
- Wages you pay your child under 21.
- Wages you pay your parent, except where your parent cares for your child who is under 18 (or needs care for a condition) and you are divorced, widowed, separated or your spouse can't care for the child.
- Wages you pay a worker under 18 at any time in the year, unless household work is their principal occupation. A student is not treated as having household work as their principal occupation.
So the high school student who babysits on Friday nights usually brings no Social Security or Medicare tax, however much you pay them. An adult sitter you pay $3,000 or more in 2026 does.
Where PayDocs fits
If you have a household employee and run payroll yourself, PayDocs makes the documents: a pay stub each payday with hours, rate, each deduction and year-to-date totals, and Form W-2 copies at year end. PayDocs works out federal income tax, Social Security, Medicare and supported state taxes for 2026 pay dates (see what we calculate). Every line is editable, so you can leave income tax withholding off when you haven't agreed to it. Our free nanny tax calculator shows the employer and employee amounts first.
PayDocs doesn't decide whether a worker is your employee, file Schedule H or pay household employment taxes. This is general information about US federal rules as of 7 October 2026, not tax or legal advice. State rules add to it; check your state's labor and revenue departments.
Questions
What is a household employee?
Someone you hire to do work in or around your home, such as a nanny, housekeeper or caregiver, when you control both what work is done and how it is done. It applies to part-time work too.
Is a babysitter a household employee?
A babysitter you hire and direct is a household employee. Whether you owe tax is separate: wages to a sitter under 18 who is a student don't count for Social Security and Medicare, and an adult sitter paid under $3,000 in 2026 brings no Social Security or Medicare tax.
Is a house cleaner a household employee?
If you hire the cleaner yourself and direct how and when they work, yes. If a cleaning company sends the cleaner and controls the work, or the cleaner runs their own business serving the public, no.
Is a nanny from an agency my employee?
It depends who directs the work. If the agency employs the nanny and controls what they do and how, the agency is the employer. If the agency only introduced you and you direct the work, you are the employer.
Do I have to withhold income tax for a household employee?
No. Publication 926 says you withhold federal income tax only if the employee asks you to and you agree. Social Security and Medicare are different: once you pay $3,000 or more in 2026, you must withhold them.
Sources
- IRS: Publication 926 (2026), Household Employer's Tax Guide
- IRS: Topic 751, Social Security and Medicare withholding rates
Sources checked October 7, 2026. This article explains how pay documents work; it is not tax or legal advice.
