8 Best Nanny Payroll Services Of 2025

Federal and state tax obligations must be understood to ensure all required taxes are withheld and remitted. For 2023, the Social Security wage base is $160,200, while Medicare taxes apply to all wages without a cap. High-income households must also account for an additional 0.9% Medicare tax on wages exceeding $200,000 for single filers. Apart from its ease of use, ADP’s biggest strength is in how many employee benefits it offers. Household employers can choose from healthcare plans, 401(k) retirement accounts and dental and vision health insurance. The company’s 24/7 customer support and three-month free trial also help ADP stand out from the crowd.

If you pay your nanny $2,800 or more per year, both you and the employee may be subject to FICA taxes on those wages. You might also have to pay FUTA taxes (and/or state unemployment taxes) if your nanny makes more than $1,000 in any quarter during the current year or the previous year. The IRS generally doesn’t require you to withhold federal income tax from a household employee’s wages unless the employee requests it and you agree.

Easy to Use Nanny Payroll Software, Now Online

If you want to offer more payment options to your employees, look for software with direct deposit, paper check and even prepaid debit card options. With the right nanny payroll service, your household hiring decision really can make life easier. If you employ a nanny, the IRS considers you a household employer, which means you’re responsible for withholding key payroll taxes from your nanny’s paycheck. You must also pay employer-only taxes, such as the employer portion of Medicare and Social Security taxes, plus federal and state unemployment taxes. While there are key differences between payroll solutions, most nanny payroll services should include a mix of the following features.

Are you a new household employer and need help setting up tax accounts?

Plus, if you apply online (the IRS’s preferred method, though you can also apply via mail or fax), you get your EIN immediately, which means your nanny will be able to start working for you right away. Enter some basic information and we can assess your payroll needs to send you customized payroll software recommendations. And if customer support is a must for you, SurePayroll is a great pick.

How to set up nanny payroll

You would also lack workers’ compensation insurance if your nanny were to get injured in your home. If you’re looking for simple payroll without all the extras, narrow down your choices to HomePay and Poppins (if you reside in a state where Poppins currently operates). However, given the price of these two, we recommend SurePayroll, as it offers more features at a lower price point. In fact, ADP RUN features an AI-powered compliance wizard that automatically catches payroll errors and updates for any changes to tax regulations. It’s like having a tax specialist at your side as you run payroll and file taxes, which means you don’t have to stress as much about potentially running foul of any tax laws.

Can families deduct nanny payroll taxes?

It scored high (4 and up) in payroll functionalities and our expert assessment of whether it is a good nanny payroll service option. However, its setup and year-end tax prep fees, as well as its lack of onboarding tools, in-house workers’ compensation plan, and benefits options, prevented it from ranking higher. On third-party review sites, like G2 and Capterra, users like QuickBooks Payroll because it’s an easy platform to navigate, has great customer service, and includes the features needed for nanny payroll. Our guide to nanny taxes has all the information you need to know about calculating and paying nanny taxes, including the tax forms that household employers need to submit.

• The company will act as your point of contact for all state tax agencies, meaning it will receive and manage all state tax notices so you have one less tax task to deal with.
• If you didn’t receive an email don’t forgot to check your spam folder, otherwise contact support.
• I recommend Paychex for this because you can set up separate company IDs with different payroll dates and methods.
• But if your business doesn’t need health insurance administration, on the other hand, you don’t want to end up paying extra for it.
• However, if you have multiple household employees and are on a tight budget, then opt for a different payroll solution.
• The solution scored 3.77 out of 5 in our evaluation, with a perfect score in its reporting capabilities.
• It’s also been insanely easy to reach a human at Poppins when necessary and everyone has been incredibly kind.

With an easy to use website, sign-up is simple and straightforward, and you can get started right away for free. HomeWork Solutions’ full-service plan includes a dedicated account representative, comprehensive household employee tax filing, tax document storage, and employee pay stub access. But at $220 a quarter (if you pay your nanny biweekly) or $245 a quarter (if you pay them weekly), HomeWork Solutions is on the pricier end of the nanny payroll spectrum. This tool has simplified paying and managing my nanny’s taxes, defining convenience in household payroll. Calculations and filings are taken care of, ensuring compliance without my constant oversight.

• However, since Paychex Flex is tailored toward small-business payroll (rather than specific to household employers), its interface will have a steep learning curve for most parents.
• These complicated financial tasks can be hard to understand, which is why many parents choose to use nanny payroll software that calculates and files payroll taxes on their behalf.
• That means it is meticulous on becoming experts and knowing the laws in the states it covers.
• It also goes the extra mile to help customers understand their new role as household employers.
• When you assign this function to the Chief Accountant, should remember that payroll accounting in Ukraine is a labour and time consuming activity.
• Overall, our experience with the NannyChex site was good, though we’re not a fan of their pricing structure, as it can get expensive.
• Flexible spending accounts can sometimes be used to offset dependent care spending.

How much do nanny payroll services cost?

The paperwork must include evidence of their identity and employment eligibility via a passport, driver’s license or other official documentation as outlined on the form. Once the Form I-9 is complete, keep it on file in case an authorized nanny payroll services U.S. government official asks to review it. We also looked at job stability during the coronavirus pandemic by examining the state’s change in unemployment rate over the past year (according to the Bureau of Labor Statistics). To find out which states were best for working parents, we used data that might indicate parents in the area had more free time to spend with their children. The Forbes Advisor Small Business team is committed to providing unbiased rankings and information with full editorial independence.