Frequently Asked Questions

If you have a household employee — like a nanny, caregiver or a housekeeper — whom you pay more than $3,000 per year (2026), 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 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 rent a place to live.

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 set up 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 W-2s and a completed Schedule H for your tax return.

Sign up here first. After signing up, you’ll be inside your account. Onboarding takes 5 minutes, and you can generate a pay stub quickly after entering your basic employer information and adding your employee.

How to hire a nanny →   See how it works →

All 50 US states and D.C. View state guides →

Generally, if you plan to pay a household worker more than $3,000/year (2026), 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, you can simply reimburse your employee with the amount that was withheld.

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 typically 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. It also doesn’t matter whether you pay the worker on an hourly, daily, or weekly basis, or by the job.

If the worker has an independent business (sole proprietorship, LLC, etc.), controls how the job is done, and provides their own tools, they are probably not your employee. See IRS guidelines (PDF) →

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.

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. We are month-to-month with no minimum contract period.

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 it for $149 or you can keep your subscription active until the work is complete.

See pricing details →

About 10% more. For example, if you pay $20/hour, 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. Learn about tax breaks →   Estimate your costs →

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 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.

We are a full-service solution:

• Registration for federal and required state tax accounts (EINs) on your behalf
• New employee reports filed with your state
• Required quarterly or annual state payroll tax filings
• Quarterly IRS 1040ES (estimated payments) for your federal taxes
• W-2s for your employees at the end of January
• W-2s/W-3 filed with the Social Security Administration
• A signature-ready Schedule H for April tax time
• Instant paycheck calculations including sick time and vacation/PTO
• Automatic emailing of pay stubs to your employee
• Integrated payments (Cash App or Venmo), or pay separately with your own method
• Year-to-date tax reports at your fingertips
• Recurring paycheck reminders
• Concierge support via text or email from inside your account

You can choose what works best for you and your employee: integrated payments (Cash App or Venmo) or pay separately through your own banking app like 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.

Your employee will file the W-2 with their 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).

Estimate gross-up wages →

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.

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(s)
• File and/or 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 pay stub for your employee(s)
• Produce completed employee W-2s
• Submit your employer W-3 to the Social Security Administration

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.

Yes. At the end of January we prepare your employee’s W-2 and send it to you inside your account with instructions. You need to share the W-2 with your employee (text/email or print). We will also file the required W-2/W-3 reports with the Social Security Administration.

You will also receive your Schedule H that you include with your personal 1040 taxes due each April.

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 allowing contributions up to $5,000 of pre-tax earnings, leading to savings on average of $1,750 or more. The care must be for a child under age 13 or a disabled dependent meeting certain 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: Complete guide to nanny tax breaks →   IRS Publication 503 (PDF) →

Please speak to your tax advisor on the best way to handle your specific situation.

Yes, you can offer educational assistance benefits of up to $5,250 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.” We do not report this as income, and it will not show up on the W-2, per the IRS.

Learn more about Educational Assistance Programs →

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.

Nanny share guide →

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. Your federal unemployment tax will also go to zero after $7,000.

Therefore you will see your employer taxes go down after that. When a new year starts in January, taxes reset and become higher again until you pass those thresholds again.

Estimate payroll costs →

If you have paid your household employee(s) less than the wage base ($3,000 for tax year 2026), 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 taxes. The reimbursement can easily be done right in your account as a tax-free reimbursement.

We take security very seriously and follow best industry practices:

• Multi-factor authentication — your account requires MFA so it knows it’s you logging in
• Server-side encryption — all data stored on our servers is encrypted with asymmetric encryption and backed by an industry-standard Key Management System
• Client-side encryption — any local copy of your information is encrypted in transit and locally with server-grade encryption
• Data in transit — all communication uses industry-standard HTTPS TLS 2.0

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.

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 by tapping on your employer profile (upper left circle), then tap on Tax Information.

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.

Yes, if your tax account was set up as a household employer. However, if it was for a commercial business, you’ll need a separate account number just for household. You can easily share your tax ID with us inside your Nest Payroll account.

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 email us at support@nestpayroll.com.

We can help you with this. We call this “catch-up.” Learn how catch-up works →

Please use Nest Payroll for all wages going forward. Estimate back taxes owed →   See catch-up pricing →

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.

If you plan to re-hire, 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 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 and do not intend to hire anyone in the future, you can cancel any time →

You can cancel your subscription at any time. 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 ($149) or not. Nest Payroll is month-to-month and ongoing tax work is included with your active subscription.

Full cancellation instructions →

Click on your employee’s initials on the main dashboard. Enter the hours (pay periods are weekly) and any overtime hours. Click Continue and review the summary. If it looks correct and doesn’t need editing, click Approve.

Once you approve it, a screen will come up to select how you want to pay the “on the books” amount.

We have weekly pay periods because government agencies require hourly/non-exempt wages to be evidenced in weekly periods due to overtime laws, and some states mandate weekly payroll for household employees (New York, for example).

If you prefer to pay every two weeks, you can pay two pay stubs at the same time every two weeks (the pay stubs remain weekly internally). You can also use the recurring feature to automate this.

Yes. From your dashboard, find the approved pay stub and use the option to void or delete it. You can then create a corrected pay stub. If you’re unsure how to proceed, email support@nestpayroll.com and we’ll help.

We’ve integrated Square’s Cash App and Venmo into the pay stub flow.

• Step 1: Make sure you already have Venmo or Cash App on the same device you run Nest Payroll, and your employee has been added as a friend/family contact (your employee is NOT a business and will receive a W-2 for taxes).
• Step 2: Create and approve a pay stub.
• Step 3: When approved, you’ll see the after-tax payment amount and a button to send via your selected service.

Many employers pay through Zelle, which you would use separately (we’d love to integrate Zelle but at this time they integrate with banks only). Each time you approve the pay stub, you’ll see a message with the after-tax paycheck amount. Simply pay that amount through Zelle, set up a direct bank transfer with your bank, or write a paper check.

To make paying easier with your own banking app, Nest Payroll has a Copy button after you approve the pay stub that can be pasted into many mobile banking apps.

Enter the total upfront hours of sick time your employee would receive for a full year. The Nest Payroll app will prorate it according to the time remaining in the calendar year. If your state law requires accrual (for example, 1 hour per 30 hours worked), the app handles that calculation automatically.

Sick time used and remaining is tracked and shown on each pay stub.

Each quarter, Nest Payroll prepares and files your federal (1040-ES) and state employer tax returns. We send you a notice when payment is due along with payment instructions — you make the payment directly to the IRS and your state agency from your own bank account.

For your federal taxes, you pay quarterly estimated payments. State tax payment schedules vary by state and are detailed in your account each quarter.

You can email us right from your account under Support, or email us directly at support@nestpayroll.com.