Do I owe household employment taxes if I pay a caregiver?

For 2026, IRS Publication 926 sets the line at $3,000. If you pay one household employee $3,000 or more in cash wages during 2026, social security and Medicare taxes apply to those wages. Federal unemployment (FUTA) tax applies once total cash wages to household employees reach $1,000 or more in any calendar quarter of 2025 or 2026.

These are the same rules people call the "nanny tax," and Publication 926 lists caretakers, health aides and private nurses as household workers alongside nannies. Here is how the IRS rules work for a family paying a caregiver, using the 2026 edition of Publication 926 and IRS Tax Topic 756.

Is a caregiver you hire a household employee?

Publication 926 says a worker is your employee if you can control both what work is done and how it is done. Household work includes caretakers and health aides as long as the work is done in or around your home.

It also says it "doesn't matter whether the work is full time or part time," or whether pay is hourly, daily, weekly or by the job.

Two situations fall outside this:

Agency workers. "If an agency provides the worker and controls what work is done and how it is done, the worker isn't your employee." A caregiver placed and managed by a home care agency is usually the agency's employee.
Self-employed workers. Publication 926 says if only the worker can control how the work is done, the worker is self-employed. Its example is a worker who runs a business and offers services to the general public.

What are the 2026 thresholds?

From Publication 926 for use in 2026:

Social security and Medicare: cash wages of $3,000 or more to one household employee in 2026. IRS Tax Topic 756 gives the same figure and notes the threshold "can change from year to year."
Social security wage base: $184,500 for 2026. Medicare applies to all cash wages.
FUTA: total cash wages of $1,000 or more in any calendar quarter of 2025 or 2026. FUTA applies to the first $7,000 of cash wages per employee.

Publication 926 says cash wages include pay by check, money order and similar methods. Noncash items such as food and lodging are not cash wages, though cash paid in place of them is.

What are the tax rates?

Social security: 6.2% from the employee and 6.2% from the employer.
Medicare: 1.45% from the employee and 1.45% from the employer.
Combined: 7.65% each, or 15.3% total.
Additional Medicare Tax: 0.9% on wages over $200,000 in a calendar year, withheld from the employee only.
FUTA: 6.0% on the first $7,000, paid by the employer, reduced by a credit of up to 5.4% for state unemployment tax. Tax Topic 756 says the net rate can be 0.6%, and the credit can be smaller in a credit reduction state.

Example at the 2026 rates: a caregiver paid $20,000 in cash wages in 2026 has $1,530 in social security and Medicare withheld (7.65%), and the employer owes a matching $1,530.

Publication 926 says you can withhold the employee's share or pay it from your own funds. If you pay it yourself, that amount counts as wages for income tax but not for social security, Medicare or FUTA.

Do you have to withhold federal income tax?

No. Publication 926 says you aren't required to. You withhold only if the employee asks and you agree, and "The employee must give you a completed Form W-4."

Does it change things if the caregiver is family?

It can. Publication 926 says not to count wages paid to these people as social security or Medicare wages:

Your spouse.
Your child under age 21.
Your parent, with an exception tied to caring for your own young child in certain circumstances.
An employee under 18, unless household work is that person's principal occupation.

FUTA has similar exclusions for a spouse, a child under 21 and a parent. Wages paid to other relatives, such as an adult child 21 or older or a sibling, are not on that list.

"Your" in these rules refers to the employer. If an adult child employs a caregiver for a parent, the relationship that matters is the one between the employer and the caregiver. Who counts as the employer in a family arrangement is a good question for a tax professional.

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What forms and deadlines apply for 2026 wages?

Publication 926 lists these for an employer over the threshold:

An employer identification number (EIN). "You must include your EIN on the forms you file for your household employee." An EIN is a nine-digit number and is different from a social security number.
Form I-9, completed by you and the employee at hire. Publication 926 says to keep it in your records and not send it to the IRS or USCIS.
Form W-2 to the employee, and Copy A to the Social Security Administration, by February 1, 2027.
Schedule H (Form 1040) with your 2026 federal income tax return, by April 15, 2027.

Tax Topic 756 notes that a sole proprietor who already files Form 940, 941 or 944 may report household employment taxes on those forms instead of Schedule H.

What about state taxes?

Publication 926 says to contact your state unemployment tax agency to find out whether you owe state unemployment tax for a household employee. It also says to check whether you must pay or collect other state employment taxes or carry workers' compensation insurance.

Does the long term care insurer handle any of this?

The LTC insurer reimburses invoices under the policy. The tax rules above apply to whoever employs the caregiver. Some insurers accept payroll records as proof of payment. FLTCIP, for example, lists payroll payments among its acceptable proofs for informal caregivers.

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Where to get help for your situation

The IRS rules turn on facts like who hired the caregiver, who controls the work, and how the caregiver is related to the employer. A CPA or enrolled agent can apply them to your household and your state. IRS.gov/Pub926 has the full text.

This is general information, not legal, tax or insurance advice. Your policy and your claim approval letter control what your insurer reimburses, and your tax professional can address your tax situation.

FAQ

What is the 2026 household employee threshold?

IRS Publication 926 and Tax Topic 756 set it at $3,000 or more in cash wages to one household employee in 2026 for social security and Medicare. FUTA applies at $1,000 or more in total cash wages in any calendar quarter of 2025 or 2026.

Is a caregiver from an agency my employee?

Publication 926 says that if an agency provides the worker and controls what work is done and how, the worker isn't your employee.

When is Schedule H due for 2026 wages?

Publication 926 says to file Schedule H with your 2026 federal income tax return by April 15, 2027, and to give Form W-2 to the employee by February 1, 2027.

Sources:
https://www.irs.gov/publications/p926
https://www.irs.gov/pub/irs-pdf/p926.pdf
https://www.irs.gov/taxtopics/tc756
https://www.ltcfeds.gov/claims-information/reimbursement