Nanny Tax Schedule H Calculator 2026

2026 Nanny Tax Thresholds and Rates

You become a "household employer" the moment you pay any single household worker $2,800 or more in cash wages during 2026. Once over the threshold, you owe Social Security tax of 6.2% (employer share) plus 1.45% Medicare tax (employer share), plus you must withhold 6.2% + 1.45% from the employee — for a combined 15.3% FICA. If you pay the worker's share yourself (common nanny-share practice), the full 15.3% comes out of your pocket and the employee's portion becomes additional taxable wages. Federal Unemployment Tax (FUTA) is triggered separately when total household wages reach $1,000 in any quarter — FUTA is 6% on the first $7,000 of each employee's wages, reduced to 0.6% in states with full FUTA credit. Source: IRS Publication 926, Household Employer's Tax Guide.

Schedule H vs Estimated Tax Payments

Household employment tax is reported on Schedule H attached to your personal Form 1040, due April 15, 2027 for tax year 2026. Unlike businesses, you do not file quarterly 941 returns. However, the IRS expects you to pay the tax during the year via estimated tax payments (Form 1040-ES) or by increasing withholding on your own W-2 — otherwise you may owe an underpayment penalty. Many household employers add the projected Schedule H liability to their quarterly estimated payments to avoid surprises. State unemployment insurance (SUI) is paid quarterly to your state and is separate from federal FUTA — most states require registration as a household employer once you cross the state threshold (often $1,000/quarter). Source: IRS Schedule H Instructions.

Cash Wages, Non-Cash Benefits, and Reimbursements

Only cash wages count toward the $2,800 threshold. Meals provided for your convenience on your premises, lodging for the employee's convenience (live-in nanny), reimbursed transit passes up to the 2026 limit, and direct payment of the employee's health insurance premiums are excluded from FICA wages and the threshold count. However, the employee's W-2 must still include taxable cash bonuses, holiday pay, and any cash you advance for the employee's personal expenses. Mileage reimbursement at the 2026 IRS standard rate or below is not wages. Per Notice 2024-08, the standard mileage rate for business use is $0.70/mile for 2026 (subject to IRS update) — anything above the federal rate becomes taxable wages. Source: IRS Publication 926.

Dependent Care FSA and the Child Care Tax Credit

Paying a nanny qualifies you for either a Dependent Care FSA (up to $5,000 pre-tax through your employer in 2026) or the Child and Dependent Care Credit (up to 35% of $3,000 for one child or $6,000 for two — phase-down to 20% at higher incomes). You cannot claim the credit on the same wages you paid through an FSA. For most families with one child, an FSA at the 22%+ marginal bracket beats the credit. The OBBB enhanced credit refundability is still being clarified by IRS through 2026 — confirm filing season guidance. The nanny must have a valid SSN or ITIN reported on Form W-2 — without it, you cannot claim either tax benefit. See our Dependent Care FSA vs Credit Calculator. Last updated May 2026.