Why pay your nanny or caregiver legally?

Are you trying to balance working in an office or at home and caring for kids, or maybe an aging parent? Have you hired a regular babysitter, nanny or a caregiver to help you? 

If you’re paying over $2,700 (2024) in a year, it’s the law to pay above board.  Many people think nannies and caregivers are independent contractors. They are actually your employee, even if they only work part-time or for multiple families. The IRS is clear that you are required to withhold social security and medicare tax and pay employer taxes. 

That sounds complicated and hard to do, and that’s where we come in. We believe you deserve an easy way to pay legally so you’re always above board. 

We created Nest Payroll, a native iOS app for your iPhone or iPad, which takes care of all your tax work, while making payday a cinch. 

Setup takes 5 minutes.

• You get walked through three easy steps to get going.

• After adding your employee, it takes seconds to pay them each week.

• Professional pay stubs are automatically emailed to your employee.

• All tax work is completed behind the scenes so you don't do anything. This includes setting up your accounts, state and federal reporting and filing each quarter, W-2s at year-end and a signature-ready Schedule H that goes with your personal taxes each April.

Why does paying on the books even matter? 

It benefits everyone. Your employee receives the safety net of unemployment insurance, Social Security, Medicare, the ability to build credit, and verifiable income for basic needs like renting an apartment. You’ll sleep better knowing you’re protected from fines, penalties, wage theft lawsuits and risk to your professional career that can be triggered when a former employee files for unemployment. 

When COVID hit, many families had to lay off their employees. If they hadn’t been paying on the books, they found themselves in a mess when their employees filed for unemployment. The employer is the one responsible for paying on the books, even if the nanny preferred off the books originally! Those families had to spend countless and frustrating hours fixing the situation with their state and the IRS. 

You might think it’s expensive to pay employer taxes, but it really isn’t too bad! It’s only about 10% more, which is well worth the peace of mind it will provide you. 

And paying above board means you can take advantage of tax credits for dependent care. Many families even break even.

Nest Payroll is the easiest way to pay your household employees legally so you’re always above board. Next time you pay, just take out your iPhone and pay in seconds, feeling confident you’re paying right. And check out our latest FAQs or reach out to us with any tax or hiring questions, we offer concierge support right in the app.