Whether you receive a W2 or 1099, here is what every nanny and babysitter needs to know about reporting income and paying the right amount of tax.
Nannies who are truly self-employed (multiple families, set their own hours) can claim these deductions.
Art supplies, educational materials, and activity supplies you purchase for the children in your care.
Required safety certifications — deductible professional expenses.
67¢/mile for driving children to activities, school, or appointments when you are acting as caregiver.
If you communicate with families about scheduling, emergencies, and care — deduct business-use percentage.
Childcare courses, early childhood education classes, and parenting workshops tied to your work.
Fees paid for required background checks to work with families.
Care.com, Sittercity, or other platform fees used to find clients.
Professional liability insurance for childcare providers.
If you run childcare in your home in a dedicated space, deduct that percentage of rent and utilities.
Self-employed nannies can contribute up to 25% of net income to shelter earnings from taxes.
If one family employs you full-time and controls your schedule, you are likely a household employee (W2). If you work for multiple families independently, you are self-employed (1099).
Families who employ a nanny owe employer payroll taxes. This is the "nanny tax." If they do not withhold, you may owe back taxes on unreported income.
Cash payments for childcare are still taxable income. The IRS expects you to report all income regardless of payment method.
If you drive children as part of your job, those miles are deductible. Most nannies overlook thousands of deductible miles.
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If one family employs you with set hours and controls your work, you are a household employee (W2). If you set your own rates, schedule, and work multiple families, you may be self-employed (1099).
The nanny tax refers to the payroll tax obligations for families who employ household workers. If a family pays you $2,700+ in 2026, they owe employer FICA taxes and may need to issue a W2.
Yes. All babysitting and childcare income is taxable. If you earn $400+ from self-employment, you must file Schedule SE for self-employment tax.
Self-employed nannies can deduct 67¢/mile for driving children to activities and school. W2 nanny employees cannot deduct work-related mileage.
Set aside 25–28% of net income for federal self-employment and income taxes, plus any state income tax in your state.
Ask anything about deductions, deadlines, or quarterly taxes. Get specific dollar amounts — not generic advice.
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