How I’m Dealing With Nanny Taxes

Know what taxes you're on the hook for.

An overhead view of a nanny showing a toddler how to paint.
(Image credit: Getty Images)

I recently became the editor of Kiplinger Personal Finance magazine. To help ensure that I’m prepared to take on this exciting new role, my husband and I decided to hire a nanny to care for our two young children while we work. Having a nanny come to our house frees up time that I previously spent running our children to and from day care. And because I work from home, I can enjoy lunch with my kids or take a walk with them when I need a break from my desk.

The convenience of having an in-home caregiver for your kids comes at a premium price and with considerable tax ramifications. The national average weekly rate for a nanny in 2022 was $701 for one child or $726 for two, according to the most recent Cost of Care survey from That compares with $268 for one child or $510 for two children at a daycare center. And because a nanny is a household employee, the IRS requires you to withhold and pay tax if her income from the nanny job reaches a certain annual minimum threshold — for 2023, it’s $2,600.

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Lisa Gerstner
Editor, Kiplinger Personal Finance magazine

Lisa has been the editor of Kiplinger Personal Finance since June 2023. Previously, she spent more than a decade reporting and writing for the magazine on a variety of topics, including credit, banking and retirement. She has shared her expertise as a guest on the Today Show, CNN, Fox, NPR, Cheddar and many other media outlets around the nation. Lisa graduated from Ball State University and received the school’s “Graduate of the Last Decade” award in 2014. A military spouse, she has moved around the U.S. and currently lives in the Philadelphia area with her husband and two sons.