First-time parents have a lot of questions, including whether they should file nanny 1099 or w2 forms. The confusion is understandable. However, knowing which form to use is important.
The Internal Revenue Service classifies nannies as household employees. Therefore, families must report them by using a Form W2.
Understanding why you need to use Form W2 is part of the process. The other part is finding the best way to file these forms. If you do not have or do not want an accountant, Advanced Micro Solutions’ base W-2/1099 Forms Filer can simplify how you create and complete your forms each tax season. Creating W2 forms for nannies or other household employees is as easy as a few simple clicks.
Are Nannies Household Employees?
The IRS categorizes nannies under the “household employee” umbrella. Household employees also include:
- Housekeepers
- Maids
- Gardeners
The IRS considers anyone an employee if they work in or around your private residence. There is an important distinction. Repairmen and other temporary contractors are not your employees. There is one key way to understand whether to file a nanny 1099 or w2. A nanny is a household employee because you not only control the work that they do, but also how they do their work.
Does the “Nanny Tax” Apply to Me?
IRS Publication 926 outlines tax requirements when you create a Form W2 for your child’s nanny. The nanny tax combines:
- Federal tax requirements
- State tax requirements
The IRS requires families to keep track of these tax requirements. Despite its name, you must meet the full outlined requirements when you hire any household employee.
In 2026, an employer who is filing a nanny 1099 or w2 form must have paid a household employee $3,000 or more in a calendar year.
The nanny tax also relates to any unemployment insurance tax payments. Your family will need to pay a nanny tax if you pay $1,000 or more within a calendar quarter. Research your specific state obligations. You do not need to pay income taxes in certain states. However, other states will require families to withhold taxes from household employees.
How to Create a W2 Form?
Make sure to file any 2025 tax year W2 forms before the deadline on Jan. 31, 2026. The Social Security Administration provides online resources for household employers. We recommend all W2 filers invest in nanny payroll software to make the entire process easier. Ask employees to complete Form I-9. Employers should then collect the form. You will use the form to reference the employee’s Social Security number and their home address.
Our W2/1099 software can help you with the next step. You can generate W2 forms with our menu-driven format. As you navigate filing a nanny 1099 or w2, our software only requires a user to input the information once.
Our software supports as many as 1,999 payers and/or employers. Print forms on pre-printed forms. Users also do not need to worry about missing their deadlines. Investing in our 1099-etc E-Filer software helps users to electronically file their year-end forms. The E-Filer sends any of your W2 forms directly to the Social Security Administration. Download our free 1099-etc Demo and get started today.
Frequently Asked Questions
- Is nanny payroll software necessary? – Getting yourself nanny payroll software will help you with more than paying nanny taxes. Using software allows employers to factor in all of the relevant insurance fees with complete accuracy.
- Do I need nanny payroll software to pay household staff legally? – While getting payroll software is not the only way to pay your household employees legally, it is a useful tool. Reporting nanny wages and calculating taxes with payroll software make the process quicker and less likely to result in unexpected audits.