More FAQs about taxes for nannies
How to handle income tax as a nanny/babysitter
It’s tax season, everybody! We know tensions are running high among our nannies as we race toward the April 15 filing deadline, and while we have covered all the big tax how-to:s in our updated 2025 tax guide for nannies, we’ve had more specific questions come in from nannies in our network about their nanny taxes. This additional FAQ gets down to details about how and why to file your taxes as a babysitter or nanny.
Whether you’re working part-time as a babysitter, or full-time as a long-term nanny, it’s important to understand your income tax for nannies obligations. If you’ve been wondering how to pay taxes as a caregiver, keep reading!
Nannies’ frequently asked questions about their taxes
1. Do I have to pay income tax as a nanny?
Yes. Regardless of full-time or part-time status, any income you receive as a caregiver is taxable. Nannies are considered household employees, which means you’re subject to federal and possibly state income taxes, as well as Social Security and Medicare taxes (FICA). Employers typically handle these withholdings if they follow household employment rules. But here’s the important thing: even if they don’t, you as the nanny are still responsible for paying taxes on your earnings.
2. How do I pay nanny taxes as a nanny?
Paying your taxes as a nanny usually involves your employer withholding federal and state income taxes from your paycheck, just like they would at any office job or other type of employment that isn’t in someone’s home. If that’s not happening (for example, if your family employer doesn’t have a proper payroll system), you still have to report the income when you file your taxes in April.
File your annual return: Come tax time (by April 15, 2025), report your nanny wages on your individual Form 1040. Please note that if your employer family does not have you on their payroll and you report that they’ve paid you, the IRS may audit them and they will be responsible for paying back taxes and any penalties involved.
3. How to file taxes as a nanny without a W-2?
If your employer does not provide a W-2 (for instance, if they paid you below the IRS threshold or paid only in cash), you must still report your nanny income on your personal tax return.
Add up your earnings: First, compile the total amount you’ve earned during the year.
Report as “Other Income” or Schedule C: Depending on the nature of your nanny work – especially if it’s irregular or the family didn’t withhold taxes – you may need to file a Schedule C (“Profit or Loss from Business”) or report it as “Other Income” if you’re considered a household employee below the threshold.
Pay estimated taxes if necessary: If no taxes were withheld and you continue to work as a nanny, you might owe estimated taxes throughout the coming year to avoid underpayment penalties.
4. Can a nanny get in trouble for not paying taxes?
Absolutely. Failure to report your nanny wages or babysitter income can lead to IRS penalties, interest on back taxes, and, in extreme cases, legal consequences. While families should handle appropriate withholdings for household employees, you’re still accountable for ensuring your total income is reported correctly each year.
5. What does “nanny tax” mean?
The term “nanny tax” refers to the combination of federal and state employment taxes that must be paid when someone hires a nanny (or babysitter) as a household employee. This includes:
Social Security and Medicare (FICA)
Federal and state unemployment taxes (FUTA, SUTA)
Federal and state income tax withholding (if applicable)
While “nanny tax” isn’t a legal term, it’s used a lot among families to calculate what they’re meant to be paying in to state and federal tax agencies. When nannies talk about it, they typically mean their own income tax.
6. Do I have to pay income tax if I work as a babysitter on the side?
Yes. Even if babysitting is just a side job, the income is taxable. The family might not provide a W-2 if you earn under the annual threshold set by the IRS ($2,800 for 2025), which also means they won’t have taken anything out of your pay to go towards taxes. However, you’re still responsible for reporting that money as income on your tax return, because you did, in fact, earn that money for work you did. It doesn’t matter if the job is short-term, part-time, or paid in cash.
The exception to this rule is: if you are a teenager, babysitting on the side while in school or not as your main occupation, you typically do not have to report this income.
7. How do I handle cash payments and still stay compliant?
Many nannies and babysitters receive cash payments or payments through Venmo. You are obligated to report that cash income to the IRS.
Track your earnings: Keep a simple log or spreadsheet of all cash payments.
Report on your return: If no W-2 is provided and you exceed the threshold for when a family should report income paid to you, consult with a tax professional to ensure you file correctly. Under-threshold income should still be reported, typically as “Other Income.”
8. Can nannies deduct work-related expenses?
If you’re classified as a household employee receiving a W-2, your ability to deduct job-related expenses (like mileage, supplies, or training costs) is typically limited. However, you can consult a tax professional and see if there are any deductions that might apply. If you work as an independent contractor, for instance if you are a newborn care specialist or doula, you can typically make a lot more profession-related deductions.
Nannying is a real career
– let us show you
As a nanny agency who has championed the professionalism and career development of caregivers for over 15 years, we know how often nannying is seen as a side gig or a cash job to be paid under the table, and we’ve seen how that has affected nannies negatively. Being paid under the table, without a W-2 and a proper job contract, has left nannies unable to file for unemployment (for instance when the pandemic cause so many families to have to lay off their caregivers), or build their Social Security.
You do important, indispensable work, and your job arrangement should reflect that. If you are looking for a fun and rewarding job in childcare that also treats you as a valued employee and professional, join us here at Smart Sitting. We’ve helped countless nannies find their dream job, whether part-time, full-time, seasonal or for the long haul. If you have what it takes, we’d love to see your application (and answer any more questions you have about your taxes!).
Apply via the button below, and happy filing! (You’ve got this!)
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