How the Nanny Tax Works for Household Employers in 2026

Hiring a nanny or housekeeper comes with tax responsibilities most people don't anticipate. In this episode of The Tax Strategy Podcast, Lucas and Luna break down the 'nanny tax' — the federal and state employment tax obligations for household employers. They walk through the $2,700 cash-pay threshold that triggers FICA taxes, the Schedule H filing process, and the surprising fact that even part-time helpers can create a filing requirement. Lucas explains how the Form W-2 for household employees differs from a 1099 and why misclassifying a caregiver as an independent contractor can lead to penalties. Luna shares a real-world example from a listener who faced an audit after paying a babysitter $18,000 in cash over two years. They also cover how the new IRS Direct File pilot in 2026 integrates Schedule H, making compliance easier. Whether you employ a full-time nanny or a weekly cleaner, this episode gives you the specific rules and numbers you need to stay compliant without overpaying. #NannyTax #HouseholdEmployer #ScheduleH #FICA #W2 #EmploymentTax #Caregiver #TaxCompliance #IRS #DirectFile #Misclassification #1099 #IndependentContractor #Payroll #FexingoBusiness #BusinessPodcast #TaxStrategy #Finance Keep every episode free: buymeacoffee.com/fexingo