Does PaySmart Offer Payroll for Caregivers or Nannies?

At PaySmart, this is one of the most common questions we get — and the answer is yes, we do provide payroll services for caregivers and nannies.

However, household payroll is a bit different from traditional business payroll, and there are a few important requirements to understand before getting started.

Understanding Household Payroll

When you hire a caregiver, nanny, or other household employee, you become what the IRS refers to as a household employer. This means payroll taxes and reporting are handled differently than they would be for a standard business.

What We Need to Get You Set Up

To properly set up payroll for a household employee, we’ll need the following:

1. Employer Identification Number (EIN)

Even though this is not a traditional business, you are still required to have an EIN for payroll reporting purposes.

👉 You can apply for an EIN directly through the IRS here:
https://sa.www4.irs.gov/applyein/

2. Social Security Number (SSN)

Because household payroll taxes are ultimately tied to your personal tax return, we also need the employer’s Social Security Number.

3. Sole Proprietor Structure

Household payroll is treated similarly to a sole proprietorship, meaning:

Payroll is set up under the head of household’s name
Tax reporting is connected to the individual rather than a separate business entity

How Taxes Work for Household Employees

Household employers are responsible for:

Federal income tax (if applicable)
Social Security and Medicare taxes
Federal unemployment tax (FUTA)

These taxes are calculated throughout the year, but here’s what makes household payroll unique:

941 and 940 taxes are still calculated, but
They are reported on your personal tax return (Form 1040) instead of being filed separately each quarter

This is why we require both the EIN and SSN — everything ultimately ties back to your individual tax filing.

Key Difference from Traditional Payroll

Unlike standard business payroll:

You will not receive quarterly Form 941 filings
You will not receive a separate annual Form 940 filing

Instead, these tax obligations are incorporated into your personal return, simplifying filing but requiring proper setup and tracking throughout the year.