# Nanny Tax Calculator > Calculate employer payroll tax obligations for household employees including Social Security, Medicare, and FUTA **Category:** Finance **Keywords:** nanny tax, household employee, payroll tax, FICA, FUTA, Schedule H, domestic worker **URL:** https://complete.tools/nanny-tax-calculator ## How the calculation works This tool uses current-year IRS rates and thresholds to calculate your complete tax obligation. **Social Security (OASDI):** Both employer and employee each owe 6.2% of covered wages, up to the Social Security wage base (which adjusts annually). If you pay an employee above the threshold for the year, you pay 6.2% and withhold another 6.2% from their paycheck. **Medicare (HI):** Both sides owe 1.45% with no wage cap. High earners may also owe an Additional Medicare Tax of 0.9% on wages above certain thresholds — this is the employee's obligation, not yours as the employer. **FUTA:** The federal unemployment tax rate is 6.0% on the first $7,000 paid to each employee per year. However, if your state is current on its federal loan repayments (most are), you receive a credit of up to 5.4%, reducing the effective rate to 0.6%. **State Unemployment (SUTA):** Each state sets its own rate and wage base. New employer rates typically range from 1% to 4%. The calculator uses the AI to provide a realistic estimate for your specific state. **Schedule H:** If you pay cash wages of $2,700 or more in a calendar year (the 2024 threshold, adjusted annually), you must file Schedule H with your Form 1040. This is the mechanism for remitting nanny taxes to the IRS. ## Exemptions you should know Not all household employees are subject to FICA taxes. Key exemptions include: - **Employees under 18:** A household worker who is under 18 years old at any point during the year is exempt from Social Security and Medicare taxes (unless domestic service is their principal occupation). - **Your spouse:** Wages paid to your spouse are not subject to FICA or FUTA. - **Your parent:** Wages paid to a parent who cares for your child (under age 18, or any age if the child has a disability) are exempt from FUTA but may still be subject to FICA in certain situations. - **Child under 21:** Your own child under 21 is exempt from FICA and FUTA while you employ them in your home. This tool accounts for these exemptions when you select the appropriate employee type. ## How to use 1. Select whether you are entering wages annually, weekly, or bi-weekly 2. Enter the gross wages you pay your household employee for the period 3. Choose your state so the calculator can estimate your state unemployment obligation 4. Select the employee type — standard employee, under 18, spouse, or parent 5. Click "Calculate Nanny Taxes" and wait for the AI to return current-year rates 6. Review your employer tax obligations, employee withholding amounts, and filing requirements 7. Note whether Schedule H is required and if quarterly deposits may apply ## Filing and payment Once you know your nanny tax obligation, you have two ways to pay: **Option 1: Increase your own withholding.** If you or your spouse receive a W-2 paycheck, you can submit a new Form W-4 to your employer increasing withholding to cover the household employment taxes. This avoids the need for separate quarterly deposits. **Option 2: Make estimated tax payments.** File Form 1040-ES quarterly and include your household employment taxes in your estimated tax calculation. At year end, you file Schedule H with your Form 1040. You also need to give your employee a Form W-2 by January 31 and file Copy A with the Social Security Administration. If you expect to owe $1,000 or more in total taxes for the year, you generally must make quarterly payments to avoid an underpayment penalty. ## FAQs ** **Q:** Do I have to pay nanny taxes if I pay in cash?** **A:** Yes. The payment method does not affect your tax obligations. Cash wages are still subject to FICA and FUTA once the annual threshold is met. Paying "under the table" exposes you to back taxes, penalties, and interest. ** **Q:** What is the nanny tax threshold for 2025?** **A:** The IRS adjusts this threshold annually. For 2024 it was $2,700 in cash wages. The calculator uses the AI to apply the correct current-year threshold for your calculation. ** **Q:** Do I owe nanny taxes if the employee only works part time?** **A:** It depends on the total wages paid in the year, not the hours worked. If you pay $2,700 or more in cash wages over the full calendar year, the threshold is met and taxes apply. ** **Q:** Can my nanny be an independent contractor?** **A:** In most cases, no. The IRS uses a behavioral control test: if you control what work is done and how it is done, the worker is an employee. Household workers rarely qualify as independent contractors under IRS guidelines, and misclassifying them can result in significant penalties. ** **Q:** What happens if I do not file Schedule H?** **A:** Failing to file Schedule H can result in penalty and interest charges on unpaid taxes. The IRS may also assess penalties for failing to provide your employee with a W-2 and for failing to file with the Social Security Administration. ** **Q:** Do I need to withhold state income tax for my nanny?** **A:** Most states require employers to withhold state income tax if the employee requests it. Your employee can provide a state withholding form equivalent to a W-4. Check your state's department of revenue for specific requirements. ** **Q:** Does my homeowner's insurance cover household employees?** **A:** Standard homeowner's policies typically exclude coverage for household employee injuries. You may need a separate workers' compensation policy, which is required by law in many states for household employers. --- *Generated from [complete.tools/nanny-tax-calculator](https://complete.tools/nanny-tax-calculator)*