Am I a household employer if I hire a caregiver?

Usually yes. If a caregiver works in your home, on a schedule you set, doing tasks the way you direct, and you pay them more than a yearly threshold (around $2,800 in 2026, check the current figure), the IRS generally treats you as a household employer and the caregiver as your employee. Agency caregivers are the exception, since the agency is their employer.

What does being a household employer require?

Get a free federal EIN, withhold the employee's Social Security and Medicare taxes, pay your employer share plus federal and state unemployment taxes, provide a W-2 each year, and check whether your state requires workers' compensation. Many families use a household-payroll service to handle all of it.

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Become a prepared employer

Am I a household employer?

Q: Can I just pay a caregiver cash or as a 1099 contractor?

It's risky. Paying under the table or issuing a 1099 to a caregiver you direct is usually misclassification, which can lead to back taxes and penalties, and it strips the caregiver of Social Security credits and unemployment protection. In-home caregivers you schedule and direct are almost always employees.

If you hire a caregiver directly, you may become what the IRS calls a "household employer." It sounds intimidating. It's really just some manageable paperwork, and you don't have to do it alone.

When you go through an agency, the agency is the employer, they handle all of this. When you hire a caregiver directly and save the agency markup, that responsibility shifts to you. Here's the plain-language version of what that means.

Does it apply to you?

In most cases, you're a household employer if all of these are true:

The caregiver works in your home (or your loved one's home).
You set the schedule and direct how the work is done.
You pay them more than a yearly threshold, around $2,800 in 2026 (check the current figure, it changes each year).

The quick test: if you control when and how the caregiver works, they're your employee, not an independent contractor. That's true even if they only work a few hours a week. More on employee vs. contractor →

What it involves

None of these is hard on its own, and a payroll service can do nearly all of them for you:

Get an EIN (Employer Identification Number), free from the IRS, online, in minutes.
Withhold the caregiver's Social Security and Medicare (FICA) taxes from their pay.
Pay your share, the employer FICA match, plus federal and state unemployment taxes.
Give a W-2 each January so they can file their taxes.
Check workers' comp, some states require it for household employees.
Keep records of hours, pay, and taxes.

Our payroll setup checklist walks all of this step by step.

Your two paths

Do it yourself

Very doable for a simple, steady schedule. You'll handle the EIN, tax withholding, quarterly or yearly filings, and the W-2. Some families use tax software to help.

Use a payroll service

A household-payroll service (often $40–$70/month) handles withholding, filings, and the W-2 for you. Most families find the peace of mind well worth it.

Why it's worth doing right

Paying "under the table" or handing a caregiver a 1099 might seem simpler, but it can create real tax problems for you, and it quietly costs the caregiver, no Social Security credits, no unemployment protection, no proof of income. Doing it properly protects both of you, and it's part of being the kind of employer good caregivers stay with.

Take it one step at a time

Estimate your true monthly cost (including employer taxes), then work the setup checklist. You've got this.

Try the pay calculator →

Common questions

Am I really a household employer for just a few hours a week?

Often yes, once you pass the yearly pay threshold (around $2,800 in 2026). The number of hours matters less than the total pay and the fact that you direct the work.

Can I just pay cash or use a 1099?

It's risky and usually incorrect for a caregiver you schedule and direct. It can lead to back taxes and penalties, and it strips the caregiver of important protections.

Is this a lot of work?

It's a bit of setup and then a routine. A payroll service reduces it to almost nothing. Either way, it's very manageable.

This is general information, not tax or legal advice. Thresholds and rules change and vary by state. Confirm your situation with a payroll service or a tax professional, and see IRS Publication 926 (Household Employer's Tax Guide).