Do I need payroll for a nanny or household employee?

Quick answer: do you need payroll for a nanny?

In many cases, yes—you may need to set up payroll when you employ a nanny/household worker and meet certain IRS or state thresholds (for example, based on wages paid in a year).

Payroll can also be required if the worker meets the legal definition of an employee (not an independent contractor) and you’re responsible for withholding and reporting certain taxes. Rules depend on the worker’s status and your total household wages, and they can vary by state.

RunWise Pay is a FREE matching service (not a payroll provider). We can help you connect with payroll service providers that handle household payroll basics, but you should confirm the exact requirement with a qualified payroll provider and/or tax professional and check the latest IRS and state rules.

• If you’re asking, “Do I treat them as an employee or contractor?” start by confirming worker status and your state/IRS thresholds first.

What “payroll for a household employee” usually includes

A payroll provider typically helps you run pay cycles, calculate wages and withholding (when applicable), and manage payroll tax filing and reporting. For household employees, this often means special handling compared with typical business payroll.

Most providers also help with year-end forms like W-2s (for employees) or 1099s (for contractors, if applicable). They may support direct deposit to the worker, produce pay statements, and keep records so you can stay organized.

Important: every provider’s included services can differ. Before you sign anything, confirm what they will do for household employees, what taxes they file, how they handle state requirements, and what deadlines they track. Ask them to put those details in writing.

• Year-end: confirm whether they handle W-2/1099 paperwork for your situation.

Step-by-step: figure out whether you should hire payroll support

1. Confirm worker status: Are they an employee (common for a nanny who works regular schedules you set) or an independent contractor (less common for childcare)?

2. Check the thresholds that trigger household employment payroll responsibilities (IRS and your state may use different rules). If you’re not sure, a qualified payroll provider or tax professional can help you interpret your situation.

3. Decide how you’ll pay: cash/check vs. direct deposit, and how often you pay (weekly, biweekly, monthly). Payroll cost and setup needs often depend on pay frequency and number of workers.

4. Get matched to a payroll service: compare a few options and choose the one that fits your comfort level, support needs, and how they handle household employee payroll.

If you want, start with Get matched with a payroll provider so providers can tell you what they support for household employees and your state.

• Before you sign, confirm in writing what’s included: tax filing, forms, direct deposit, pay-cycle handling, and support.

How much does household payroll cost? (realistic ranges)

Pricing varies widely, especially for household payroll. Many providers charge a base monthly fee plus a per-employee or per-worker fee, and some charge extra for things like year-end forms or additional pay runs.

As a practical range—not a quote—you might see something like a low monthly base with an added fee per worker, often totaling anywhere from “tens of dollars” up to “a few hundred dollars per month,” depending on your state, pay frequency, and what’s included. Year-end support can be included or billed separately.

Because ranges aren’t quotes, ask for a written summary of the full cost for your exact setup (one worker vs. multiple, pay schedule, and which forms/tax filings are included). If the pricing is vague or changes later, that’s a red flag.

• Ask for a written price summary tied to your number of workers and pay frequency.

Payroll red flags to avoid (especially when you’re new to US payroll)

When choosing payroll help for a nanny/household employee, watch for signs of trouble. Common red flags include vague pricing (“we’ll confirm later”), hidden fees for basic steps, and unclear answers about whether they actually file required taxes or prepare household-specific year-end forms.

Another red flag is poor support—slow replies, no clear way to contact someone, or a process that doesn’t explain what you need to provide and when. Be cautious if you feel pressured to sign fast without a written list of included services.

Also watch for providers who won’t clearly state responsibilities for tax filing or who offer “guarantees” that sound unrealistic. There are no one-size-fits-all guarantees in tax and compliance.

Confirm what’s included in writing before you sign. And because we’re general-information only, verify details with a qualified payroll provider, accountant, or tax professional and check current IRS/state guidance yourself.

• Confirm “what they do” and “what you still must provide” in writing.

How RunWise Pay can help (free) + what we need from you

RunWise Pay is a FREE matching service that connects small and mid-size US businesses with payroll service providers that can help with payroll tasks like running pay, handling payroll taxes, paying by direct deposit, and preparing year-end forms.

We’re not a payroll provider, accountant, bookkeeper, or tax advisor—we don’t run payroll, file taxes, or give tax/legal advice. The goal is to help you find a provider that fits your household payroll needs and your state.

To match you, we collect contact + business intent only: business name, your name, phone, optional email, how many people you pay, your state, and a preferred language. We do not request SSNs, EINs, bank account numbers, or any employee personal records.

If you’d like help getting started, visit Get matched and/or explore our guides to learn household payroll basics.

• If you’re unsure where you stand, start the match process—providers can explain what they support for your state and situation.