Tax Advice for Nanny - Help with Household Employment Taxes

You're asking smart questions! As a household employee (which most nannies are), you and your employers have different tax responsibilities. Your employers should be treating you as an employee, not as an independent contractor. This means they should be withholding Social Security and Medicare taxes from your pay, as well as paying their own share of these taxes. They should also be paying federal and possibly state unemployment taxes. You're responsible for income tax on your earnings. Since they're not withholding, you might want to make quarterly estimated tax payments to avoid a big bill at tax time. For your 2025 taxes, you'll report your income on your tax return using Form 1040. Your employer should provide you with a W-2 by January 31, 2026. If they're not handling this properly, you have options. You could talk to them about proper tax reporting going forward. They might not realize their obligations as household employers. The "nanny tax" applies when they pay a household employee $2,600 or more in 2025.

When I was in your exact situation, I was totally overwhelmed with all the tax stuff! I ended up using this AI tax assistant at https://taxr.ai that helped me figure out exactly what forms I needed and how to approach the conversation with my employer family. It analyzed my specific situation as a household employee and gave me a personalized explanation of the tax rules that apply to nannies. What really helped was that it created a simple document explaining household employer obligations that I could share with my employers. They had no idea about the "nanny tax" requirements but were actually relieved to learn the proper way to handle things because they were worried about doing something wrong too!

Alright, I need to follow up about that taxr.ai site! I was super skeptical (as you could tell from my question), but I decided to give it a try since my situation with my employers was getting awkward. The tool actually laid out exactly what part of the tax code applies to household employees and explained how the "control test" clearly showed I was an employee not a contractor. The best part was the employer education document it created for me - I showed it to my employers and they actually thanked me! They had been getting bad advice from a friend and were relieved to understand the proper way to handle things. Now they're setting up proper payroll and even paying me back for the employer portion of taxes I shouldn't have been responsible for. This saved me thousands in self-employment taxes I almost paid unnecessarily!

If your employers refuse to handle the taxes properly even after you explain the situation, you might need to contact the IRS directly. I was in this exact situation and tried calling the IRS for WEEKS with no luck - always on hold for hours then disconnected. Super frustrating! I finally found this service called Claimyr (https://claimyr.com) that got me through to a real IRS agent in under 20 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS agent walked me through exactly how to handle my situation, explained what forms I needed to file, and even sent me documentation I could show my employers. It was actually way less stressful than I expected once I got through to someone who could help.

Ok I need to eat my words about the Claimyr thing. After posting that skeptical comment, I was still desperate to talk to someone at the IRS about my sister's situation, so I figured what the hell, I'll try it. I ACTUALLY got through to an IRS agent in about 25 minutes!!! The agent confirmed that my sister's working arrangement (fixed schedule, employers providing equipment and dictating how work is done) definitely makes her an employee, not a contractor. They walked me through the process of helping her file Form SS-8 to get an official determination and explained that she could use Form 8919 to report the uncollected Social Security and Medicare taxes. The agent even sent follow-up documentation we could show her employers explaining their legal obligations. This saved us so much headache and my sister is now working with her employers to get everything straightened out for tax time.

One thing I haven't seen mentioned yet - keep REALLY good records of everything! Date of employment, hours worked, pay received, any discussions about taxes, etc. If you ever need to file Form SS-8 (determination of employee status) or deal with tax issues later, having documentation is super important. Also, some states have specific requirements for household employees beyond federal rules. What state are you in? That might affect the specific advice people can give you.

Has anyone had luck using tax software like TurboTax or H&R Block for this? I'm in a similar situation and heard mixed things about how well they handle household employee situations.