How to legally hire a nanny: a step-by-step guide for families

To legally hire a nanny, treat them as your household employee: complete Form I-9, get an EIN, pay at least minimum wage and keep records. Add overtime where it applies, and withhold and match Social Security and Medicare taxes once 2026 cash wages reach $3,000. At tax time, file a W-2 and Schedule H, which also covers federal unemployment tax when it applies.

You're hiring someone who will help raise your kids.

When you hire a nanny directly on Gathered Hands, there's no agency in the middle. That means you are the employer, and we'd rather tell you plainly up front.

This is someone you trust in your home with your kids. Paying them on the books protects both of you. This guide covers federal rules, and your state may add more.

Your nanny is your employee.

The IRS household employee tax rules say household workers are your employees if you control the work they do and how they do it. The IRS list names babysitters and others who do household work in your home. It doesn't name nannies, but a nanny fits the same control test.

Think about a normal day. You set the hours, and you decide how naps and meals go. That's control, and it points to an employee.

Compare that with a plumber you call for a leak. The IRS says plumbers and other business people who work as independent contractors aren't your employees. This is why a "1099 nanny" setup doesn't fit when you direct your nanny's day.

A few people you pay are exempt from Social Security and Medicare taxes. These include your spouse, your child under 21, your parent in most cases, and a worker under 18 whose main job isn't household work. Being a student doesn't count as a main occupation, so a high schooler who babysits usually falls in this group.

Being on the books matters to your nanny too. Their pay shows up on a W-2, and Social Security and Medicare taxes get paid on their work. That's how you treat a nanny as the professional they are.

If you're a nanny, you can create your nanny profile and get discovered by families who hire directly. You can browse real jobs and apply to the ones that fit you.

What the law asks of you.

Your duties fall into two groups. The U.S. Department of Labor sets the pay rules, and the IRS handles the taxes.

These rules usually live on separate agency websites. Below, you'll find them in one place, each in a short block.

The nanny tax, in plain terms.

The "nanny tax" is the everyday name for household employment taxes. It covers Social Security and Medicare taxes (often called FICA) and federal unemployment tax (FUTA).

Federal income tax withholding sits alongside them, and it's optional. Each tax has its own threshold, so check them one at a time.

Social Security and Medicare.

If you pay one household employee $3,000 or more in cash wages in 2026, you generally withhold 7.65% of their pay. That's 6.2% for Social Security and 1.45% for Medicare. You then pay a matching 7.65% yourself.

The IRS notes the threshold can change from year to year, so check it each year. You can also choose to pay your nanny's share from your own funds instead of withholding it. If you do, talk it through with your nanny so the paycheck matches what you both expect.

Federal unemployment tax.

If you pay household employees more than $1,000 in cash wages in any calendar quarter, this year or last, you generally owe FUTA. The tax is 6% of the first $7,000 you pay each employee.

You may get a credit of up to 5.4% for state unemployment contributions, which can bring the net rate to 0.6%. Some states have a reduced credit, so your number can differ. FUTA is yours alone to pay, and you never withhold it from your nanny's wages.

Income tax withholding.

You aren't required to withhold federal income tax from your nanny's pay. If your nanny asks you to and you agree, have them fill out a Form W-4.

Minimum wage and overtime.

Federal wage law, the Fair Labor Standards Act, covers domestic workers and lists nannies by name. The U.S. Department of Labor's DOL live-in domestic worker rules say covered workers get at least the federal minimum wage for all hours worked. They also get time and a half for hours over 40 in a workweek.

The federal minimum wage is $7.25 an hour. Under the U.S. Department of Labor's federal minimum wage rules, when state and federal rates both apply, your nanny is entitled to the higher one. On Gathered Hands, nannies set their own rates and keep all of it.

Live-in nannies have one exception, and it covers overtime only. Federal law may exempt a nanny employed by a family from overtime if they live in your home permanently or for extended periods. That generally means at least 5 days or 120 hours a week, and minimum wage still applies to every hour worked.

You and a live-in nanny can agree in writing to exclude genuine off-duty time from paid hours, including bona fide meal and sleep periods. If a call to duty interrupts that time, the interruption counts as hours worked. That agreement belongs in your records, covered next.

Records you keep.

Federal law puts recordkeeping on you, the employer. Keep your nanny's name, Social Security number, address and hours worked each day and week.

Also record weekly cash wages and overtime pay. If you count board or lodging toward wages, record that too.

The U.S. Department of Labor's DOL household recordkeeping requirements say you must keep records for at least three years. Records used to figure pay should be kept for two years.

Your nanny can log their own hours, but the responsibility stays with you. For a live-in nanny, keep a copy of any written sleep or meal agreement, and still record their hours. The Department of Labor warns that failing to keep accurate records of hours worked may leave you owing back wages.

How to hire your nanny on the books.

Once you've found the right person, the paperwork follows a simple order. Most of it happens once, at the start, and once a year at tax time. Here's the checklist, start to finish.

1. Verify your nanny's work eligibility with Form I-9.

   USCIS domestic worker I-9 guidance says you generally must complete Form I-9 for a domestic worker who provides child care regularly. USCIS makes exceptions for sporadic or irregular work and for workers employed by an agency. You can never knowingly hire someone who isn't authorized to work in the U.S.

2. Get a free EIN from the IRS.

   You'll need an EIN for your nanny's Form W-2, and you can apply for an EIN online directly with the IRS. The IRS says you never have to pay a fee for one, so skip any site that charges.

3. Write down the pay, hours, duties and house expectations you agree on.

   Set pay at or above the minimum wage that applies to you. Include overtime where it applies, so you both know what each week looks like.

4. Run payroll every pay period.

   Withhold Social Security and Medicare once you expect to reach the $3,000 threshold. Track every hour your nanny works, including the long days.

5. File your household employment taxes at tax time.

   Give your nanny a Form W-2, and complete a Form W-3 to transmit it. File Schedule H with your Form 1040, or on its own if you don't need to file a return. The IRS Publication 926 guide is the IRS household employer's tax guide, and it helps you decide whether you owe federal employment taxes.

   To avoid owing at filing, pay enough tax during the year. You can ask your own employer to withhold more from your wages, or make estimated payments with Form 1040-ES. If you don't, the IRS says you may owe an estimated tax underpayment penalty.

Hiring directly, done right.

When you hire this way, your nanny gets fair pay on the books, and your family is protected. You both start the relationship on honest ground, with clear pay and clear records.

This guide is for families who want to hire a nanny directly and do it the right way. Gathered Hands lets you browse real nanny profiles and message nannies directly.

You pay a flat monthly fee with no placement fee. We never take a cut of your nanny's pay, so the rate you agree on is the rate they earn.

This guide covers federal rules only; check with a tax professional or your state labor agency, as Gathered Hands doesn't give tax or legal advice.

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