Email: SUPPORT@NESTPAYROLL.COM
Text: 650-460-1750
Frequently Asked Questions
Q. What can Nest Payroll do for me?
A. If you have a household employee--like a nanny, caregiver or a housekeeper--whom you pay more than $2,800 per year (2025), or $1,000 or more in a quarter, then Nest Payroll was built for you.
Nest Payroll is an easy to use web application and/or mobile app that provides peace of mind by keeping you legal when you pay your home employees. You avoid fines and tax penalties, and become potentially eligible for dependent care tax breaks.
Paying legally also maintains a professional relationship with your employee, who receives peace of mind knowing there’s a safety net such as unemployment benefits and accumulating Social Security and Medicare credits. Legitimate income enables your employee to apply for car, school or home loans, open a bank account or be able to rent a place to live.
In addition, using Nest Payroll will save you over 60 hours during the year. That’s the average time the IRS calculates it would take you to do it yourself!
Nest Payroll is easy to setup and use, which enables you to create your first paycheck in minutes. Once your profile, authorization and subscription are completed, Nest Payroll handles the new hire reports, state and federal employer tax IDs, paystubs, quarterly payroll tax filings, and provides all the year-end requirements including W2s and a completed Schedule H for your tax return.
Q. How much does it cost to pay on the books?
A. About 10% more. Let’s say you pay $20/hour, so budget $22. This covers the employer portion of taxes you’re responsible for: social security, medicare, federal and state unemployment insurance. If you qualify for the dependent care tax credit or have a FSA, you might get money back.
Q. How is Nest Payroll different?
A. Our mission is to make household payroll so fast, easy and affordable, it beats paying under the table by a mile! Onboarding takes less than 5 minutes. You can choose to pay with integrated payments (Venmo and Cash App) which allows you to create a paycheck and pay right away. There are no extra charges for off-cycle payroll runs. Unless you have autopay on, there are no payroll deadlines or cutoffs and we don’t charge fees if you need to pay twice in the same pay period. We are the most affordable full-service solution, at $42/month.
Q. How much does Nest Payroll cost?
A. Simply $42/month, and all ongoing tax work required by the IRS and your state is included with your active subscription. You can pay anytime your employee needs to get paid. If you need to add a second employee, simply upgrade to our $49 plan. Please see our pricing page for more details if you have more than one employee.
We’re confident you’ll have a great experience. If you subscribe through our website, you’ll receive a 14-day free trial so you have time to make sure we’re a good fit. Please note, if you subscribe through Apple Subscriptions, there is not a free trial option.
We are month to month and don't mandate a minimum contract period. While you have an active subscription, tax work is included automatically. Once you cancel, future tax work is not included and might be required even if you’re done paying your employee. If you have future tax work, we can handle your future state and federal tax work for $149 or you can keep your subscription active until the work is complete. We make it easy to cancel at any time from your employer profile.
Q. What do I need to access the service?
A. You will need access to the web.
A. We are a full-service solution:
Registration for Federal and State Employer Identification Numbers (EINs) on your behalf.
New Employee reports filed with your state.
Required quarterly or annual state payroll tax filings. We report and file to your state and your state will deduct the amount of tax owed directly from your bank account (we’ll give you a heads-up). There’s no work on your part other than making sure your bank account has the funds for withdrawal.
Quarterly IRS 1040ES (estimated payments) covers your federal taxes. These payments are deducted from your bank account by the IRS (just like your state).
W2s for your employees at the end of January.
W2/W3s filed at year-end with the Social Security Administration.
A signature-ready Schedule H for April tax time that you can also share easily with your accountant.
Instant paycheck calculations including sick time and vacation/PTO taken, plus tax-free health insurance reimbursements.
Automatic emailing of the pay stub to your employee.
Choose to pay your employee with integrated payments (Cash App or Venmo), or pay separately with your own banking app or write your own check.
Year-to-date tax summary at your fingertips.
Set up reminders and make your weekly paycheck recurring to make it easier to approve payroll.
Resources: Get answers on important topics like the child care tax credit, dependent care flexible spending accounts, and more.
Concierge support: Contact us from inside your account anytime via text or email.
Q. How do I get started?
A. Sign up here first. After signing up, you’ll be inside your account. Onboarding takes 5 minutes, and you can generate a paycheck quickly after entering your basic employer information and adding your employee. See some common Getting Started FAQs.
Q. What states are covered?
A. All 50 US States and D.C.
Q. Do you help me register and get my EIN with the government entities?
A. Yes, we’ll get you registered as a household employer with the IRS and your state, obtaining your federal and state employer identification numbers. You will be asked in your employer profile to authorize us to do so. If you already are registered as a household employer, complete the authorization and share your tax IDs afterwards inside your employer account.
Q. Why do you need my social security number and bank account?
A. When you onboard with Nest Payroll, we require your data in order to:
Apply for and obtain your household Employer Identification Number (EIN) from the IRS.
Apply for and obtain your state employer tax account number.
File and facilitate payment of your payroll taxes with the IRS, the Social Security Administration and your state tax authority.
Produce your Schedule H for your federal return.
Produce a legal paystub for your employee(s).
Produce completed employee W2s.
Submit your employer W3 to the Social Security Administration.
Q. How does my employee get paid?
A. You can choose what works best for you and your employee:
integrated payments (Square’s Cash App or Venmo)
pay separately through your own banking app or with Zelle or write your own check
You can elect to make the pay stub recurring so you never forget which week to pay. The latest pay stub will be waiting on your dashboard for you to approve on the day you want. You can always edit the hours, add overtime or incidentals before you approve the pay stub. Once approved, your employee automatically receives the professional pay stub, and you select your payment choice to transfer the funds. See our Getting Started FAQs for more details.
Q. How do taxes work for my employee?
A. Your employee will file the W-2 with his/her personal income tax return. In the meantime, each time you pay your employee, there will be a portion of the total "gross" pay that is withheld/deducted, so you give a payment for less (the "net" paycheck amount). That difference will be part of the tax payment you make each quarter that we handle for you. So, each quarter you'll pay your employer taxes (about 10% of wages) PLUS the portion that your employee owes (that you withheld).
Q. How secure is my data?
A. We take security very seriously, and follow best industry practices. We also ask for the minimum amount of information that enables us to process your household payroll.
Our architecture has been built from the ground up with your data security in mind:
Your account requires multi-factor authentication so it knows it’s you logging in
For the native Apple app, we recommend you use Apple’s Password AutoFill feature at account creation. With a simple tap, you can create and save new passwords. Passwords generated by iOS, by default, are twenty characters long. They contain one digit, one uppercase character, two hyphens, and sixteen lowercase characters. These generated passwords are strong, containing seventy-one bits of entropy.
Access to your data is protected with your account credentials. Please ensure you’re using a safe and unique password to protect your data.
All credentials and passwords are stored on your iOS device’s Keychain.
Server-side data at rest encryption: All data stored on our servers are thoroughly encrypted with asymmetric encryption and backed by an industry standard Key Management System that ensures rotating encryption keys and minimizes vectors of attack.
Client-side data at rest encryption: In order to make the app responsive and easy to use, we sometimes require the download of some of your personal information from our secure servers. We ensure that any local copy of that information is encrypted in transit as well as locally with server grade encryption.
Data in transit encryption: All communication with our servers use industry standard HTTPS TLS 2.0 to ensure data in transit is always secure.
Q. Do you file the state-required New Hire Report for me?
A. Yes, we will take care of this for you. We prepare the report on your behalf for each employee you hire and file it with the state.
Q. Do you provide a W2 and Schedule H at the end of the year?
A. Yes, at the end of January we prepare your employee's W2 and send it to you inside your account with instructions. You need to share the W-2 with your employee (text/email or print it for your employee). We will also file the required W2/W3 reports with the Social Security Administration. You will also receive your Schedule H that you include with your personal 1040 taxes due each April.
Q. When do I need to start paying a household employee legally?
A. Generally, if you plan to pay a household worker more than $2,600/year (2023) or $2,700/year (2024), then you are required to pay federal payroll taxes including social security and medicare. However, state requirements differ from federal, often with wage thresholds starting at $500, $750 or $1,000 in a quarter. It’s best to pay legally with the correct withholding from the beginning. If you don’t reach the minimum threshold, then you can simply reimburse your employee with the amount that was withheld.
Q. Who is considered a household employee?
A. You have a household employee if you hired someone to do household work or take care of your children or dependents, and you control not only what work is done but also how it is done. For example, in the case of a nanny, the parents control the schedule, specify the food that the nanny feeds to the children and direct what activities the children undertake. The same criteria applies to pod tutors, caregivers, private nurses, house cleaners, housekeepers, gardeners, estate managers and personal chefs.
It doesn't matter whether the work is full time or part time or that you hired the worker through an agency or from a list provided by an agency or association. It also doesn't matter whether you pay the worker on an hourly, daily, or weekly basis, or by the job. The employee may have other employers, as would be the case of a nanny share.
Ask yourself who has control: the employee or you, the employer? If the worker has an independent business (sole proprietorship, LLC, etc.), controls how the job is done (you don’t give them feedback on how to do it), provides his or her own tools, you make the payment to a business name, then he or she is probably not your employee. See IRS guidelines here.
Q. How do I report taxes in my nanny share?
A. If you share an employee with another family, both families are separate employers. Each family is responsible for withholding and paying payroll taxes on their share of the wages paid to the employee, and thus need their own separate payroll account. Each family will also be eligible to apply for tax credits at tax time and to take advantage of a dependent care FSA through their work, if available. Many families who have a nanny share split the hourly rate when they pay, but keep in mind that each family must still pay at least the minimum wage. Resource: 10 Compelling Reasons to be Part of a Nanny Share
Q. How do I get a tax break on childcare or dependent care?
A. There are a couple ways to claim a tax break for care for a dependent:
1. Flexible Spending Accounts (FSA) or Dependent Care Assistance Program (DCAP) – Many companies provide this as a benefit to their employees and allow contributions up to $5,000 of pre-tax earnings, leading to a savings on average of $1,750 or more. The care must be for a child under age 13 or a disabled dependent meeting certain other requirements.
2. Child and Dependent Care Tax Credit – For folks who don’t have access to a Dependent Care Account through work, you can claim the Child and Dependent Care Tax Credit (Form 2441) on your personal income tax return at tax time.
Read: Dependent Care Ways to Save
Please refer to the IRS details here: https://www.irs.gov/pub/irs-pdf/p503.pdf
Please speak to your tax advisor on the best way to handle your specific situation.
Q. Can I help my employee with tuition reimbursement as a benefit?
A. Yes, you can offer educational assistance benefits of up to $5,250.00 annually, tax free to both of you. When you create a pay stub for your employee, you'll see "Non-Taxable Reimbursement" as an option. Enter the education amount under "Other Amount" (not the health care one). We do not report this as income, and will not show up on the W-2, per the IRS.
Q. I just started paying my new employee but my employer taxes are higher than what the calculator told me. Why?
A. In the calculator, expected taxes are averaged over an entire year (good for budgeting purposes). Once you pay wages of a certain amount (depends on your state), you will pass your taxed wage threshold, and your unemployment (state) taxes will go to zero. Also, your federal unemployment tax will go to zero after $7,000. Therefore you will see your employer taxes go down after that.
When a new year starts again in January, taxes will get reset, and become higher again until you pass those tax thresholds again.
Q. What if I have a question?
A. You can text or email us right from your account under Support, or to (650)460-1750 or support@nestpayroll.com
Q. What if I already use a payroll service, but I would like to switch?
A. If you cancel an existing service provider during the current tax year, let us know! This is important so your employee’s W-2 is correct. We’ll send you an easy form for communicating the wages and taxes you have paid so far. Please text us at 650-460-1750 or email us at support@nestpayroll.com.
Q. I paid my employee without payroll. Can you fix this for me?
A. We can help you with this. We call this “catch-up”, and have an overview on how this works. Please view our pricing page for the catch-up pricing. Please use Nest Payroll for all wages going forward.
Q. My employee will be gone for several weeks. What do I do with payroll?
A. Even if there’s no payroll to report for a while, quarterly filings are still required which Nest Payroll will submit on your behalf. Your subscription will need to continue normally, and you don’t have to do anything until you need to make the next paycheck when your employee returns.
Q. Why do I need to authorize power of attorney to Nest Payroll?
A. Federal and state law requires all payroll providers to obtain this authorization, which allows us to:
obtain your federal EIN
electronically report, file, and enable payment of a household employer's taxes with the appropriate state agencies.
request and inspect a household employer’s confidential tax information, e.g., the proper state tax rates.
report new hires to the appropriate state labor departments.
Power of attorney does not authorize payroll providers to make legal decisions for the household employer.
Q. I already have an EIN. Do you need it?
A. Yes, if your Federal EIN is for a sole proprietor or household employer, we’ll need the same number. You can enter the EIN inside your account, or text us at (650)460-1750 or email us at support@nestpayroll.com.
If the Federal EIN is for a corporation, LLC, partnership, etc., then you will need a different EIN as a household employer. We will handle obtaining this for you.
Q. I already have a state employer tax number. Do I keep this?
A. Yes, if your tax account was set-up as a household employer. However, if it was for a commercial business, you’ll need to have a separate account number just for household. You can easily share your tax ID with us inside your Nest Payroll account.
Q. What if I hire an employee but they earn less than $2,700 in wages?
A. If you have paid your household employee(s) less than the wage base, which is $2,700 for tax year 2024, all withheld social security and Medicare taxes must be refunded to the employee. Usually state taxes like unemployment still apply, and we’ll still produce a W-2 for your employee and a Schedule H for you. When you receive your employee’s W-2 at the end of January, you’ll also receive instructions if you need to reimburse any withheld social security and medicare tax. The reimbursement can easily be done right in your account as a tax-free reimbursement.
Q. I have an active subscription but my employee quit. What should I do?
A. If you plan to re-hire, then you don’t need to do anything. Your Nest Payroll subscription should remain active. Your state employer account remains open and if you pass a quarter with no wages, we file for a “no wage” report. All year-end requirements are also included with your active subscription. Once you’ve re-hired, you can add your new employee to your Nest Payroll account.
If you completely stop employing people to work in your home and do not intend to hire anyone in the future, you can cancel any time.
A. You can cancel your subscription at any time. To cancel easily, log in to your Nest Payroll account, tap on your Employer Profile (upper left circle), tap on Subscription Status and you’ll see the Cancel Subscription option. You’ll be given the option for Nest Payroll to handle your future tax work or not.
Nest Payroll is a month-to-month subscription and ongoing tax work is included with your active subscription. If you have future tax obligations after you leave, you can handle them directly (please make sure to elect this option) or ask us to complete your future tax work for you for $149.