Household Employment "Nanny" Taxes


Your responsibility

Individuals who employ domestic workers have a duty to pay social security, unemployment, and workers compensation taxes on these individuals' incomes when certain income thresholds are exceeded. IRS instructions for Schedule H (Form 1040) provide specific guidance on your responsibilities regarding federal taxes for household workers. Guidance for Ohio state unemployment is available at the Department of Job and Family Services website. Guidance for Ohio workers compensation is available at the Ohio workers compensation website.

Who is a household employee?

Generally, anyone you hire to perform personal services will likely be deemed a household employee. This can include babysitters, caretakers, cleaning people, housekeepers, nannies, private nurses, yard workers, and personal drivers.

In certain circumstances domestic workers are not your employees. Workers of companies which you contract for services are not your employees. Also, workers that you hire directly are sometimes independent contractors and are not your employees. Independent contractors usually hold themselves out as being in business, have multiple customers, provide their own tools, and the like.

Caution--It is dangerous to automatically assume a domestic worker is an independent contractor. If you are wrong, there can be serious sanctions levied by the IRS and state government. When in doubt, solicit input from an informed professional such as a tax attorney or accountant.

A taxpayer's spouse is never considered a household employee and children under 21 and parents of taxpayers usually are not considered household employees.

What are the 2021 income thresholds that trigger reporting?

Tax Item Wage Thresholds Employer Tax Liability Worker Tax Liability Frequency Remitted
Social Security More than $1,900 to any worker in a calendar year The employer and worker each must pay 6.2% of the 1st $142,800 in wages for a total of 12.4% Quarterly on IRS Form 1040-ES.  Both employer and worker portions must be remitted.
Medicare The employer and worker each must pay 1.45% of all wages earned for a total of 2.9%
Federal Unemployment More than $1,050 in any calendar quarter obligates payment for that employee for both the current and following years. 0.6% of the 1st $7,000 in wages earned Workers are not permitted to pay unemployment and workers compensation taxes.  These taxes must be paid by the employer.
State Unemployment Approximately 2.7% of the 1st $9,000 in wages earned Quarterly on Ohio Form  JFS-66111
Workers Compensation More than $160 paid to any worker in a calendar quarter Approximately 1% - 2% of all wages earned Bi-monthly

Are there any other requirements?

An employer must do the following if any domestic workers earns more than $1,900 in a calendar year:

  • Employer must have an Employer Identification Number ("EIN"). IRS Form SS-4 is used to apply for an EIN.
  • Employer must verify that the household worker is eligible to work in the United States by completing INS Form I-9.
  • Employer must report each new hire to the State of Ohio within 20 days of hire by completing ODHS Form 7048, State of Ohio New Hire Reporting.
  • Employer must annually file Schedule H-Household Employment Taxes with the employer's personal income tax return.
  • Employer must annually report wages to the Social Security Administration by completing IRS Forms W-2 and W-3.

An employer must fulfill the following state (Ohio) unemployment requirements if income thresholds are exceeded:

  • Employer must open an unemployment account by completing Ohio Job & Family Services Form JFS 20100.

An employer must fulfill the following state (Ohio) workers compensation requirements if income thresholds are exceeded:

This seems like a lot to do. How do I get help?

Beatrez & Company CPAs can manage these tax filings for you for approximately $500 per year. We will advise you of all deadlines and prepare tax filings for your signature. This will provide you with peace of mind that you are in compliance with federal and state requirements.

For more information, contact: or

440-668-1270 | 440-235-1468 fax