How to Hire a Nanny in 2026: The Full Legal Process Explained

Hiring a nanny is an important occasion in the life of every family. It can be stressful to people who don’t have any previous experience of such delegation. But hiring a caretaker also means that you will have good, dedicated, and personalized care in your own home, which lifts a lot of weights off the tired parents’ shoulders.

If you are a first-time employer, you have to remember that hiring a nanny is a professional contract, not a personal agreement. So, besides just being a parent, you become a household employer.

Understanding how to legally hire a nanny works well for both sides. It helps you protect your family from legal disputes and making mistakes that might cause tax audits. And, for a nanny candidate, it helps them get the professional benefits they deserve (such as Social Security and unemployment insurance, for example).

That’s why we have created this guide. To give you a full picture of what to know before signing your first nanny work agreement and provide you with step-by-step instructions on how to hire a nanny.

Any family employer should obtain the Employer Identification Number (EIN). Basically, it is a so-called social security number for your household business. That’s why it is important to register one before you get a nanny. Even though you are not running a huge corporation and only aim to hire a caretaker, the IRS (Internal Revenue Service) treats your home as a place of business when you hire someone as staff.

Thanks to EIN, you will be able to report the taxes you withhold from your nanny’s paycheck to the IRS. Most states require it to register for state unemployment insurance, so it’s better be done on time.

Besides, without an EIN, you won’t be able to legally file Form W-2 at the end of the year that summarizes annual wages and tax withholdings.

Families who want to hire a nanny sometimes get confused about whether their new caretaker is an "employee" or an "independent contractor" (someone who would receive a Form 1099).

For federal tax purposes, the IRS generally treats a nanny as a household employee if you control not only what work is done, but how it is done. This is part of the IRS common-law control test. By contrast, under the FLSA, the Department of Labor uses an economic reality test to determine whether a worker is an employee or an independent contractor. These tests serve different legal purposes and should not be confused.

Also, in 2026, if you pay your nanny $3,000 or more in a calendar year, you need to withhold and pay Social Security and Medicare taxes.

The best time for a background check is after you conduct a successful interview with a nanny candidate, but before signing a work agreement with them. You can tell the candidate that you are ready to offer them a contract, but only if their background and references come back clear. This method is known as the "Conditional Offer" Strategy and is widely used in many working areas. Keep in mind that there are some limitations to the conditions you can require (often related to the Fair Credit Reporting Act (FCRA) and Americans with Disabilities Act (ADA)).

If you obtain a background report from a consumer reporting company, the FCRA requires a clear written disclosure in a stand-alone document and the candidate’s written authorization before the check. If the report may lead you not to hire the candidate, provide a pre-adverse action notice together with a copy of the report and “A Summary of Your Rights Under the Fair Credit Reporting Act” before making the final decision.

Keeping things formal here protects both you and the nanny, so it is a win-win.

When bringing someone so important into your home, it is not enough to go for a “handshake deal.“ Take your written employment contract (or work agreement) seriously: set clear expectations and make sure it can prevent future conflicts. Before your nanny starts to work, define the following:

If you are determined to pay your nanny legally, there are three main steps you will need to take: taxes, records, and insurance. Let's take a closer look at each of them.

This is the thing you have to handle first. This includes Social Security and Medicare, which add up to 15.3% of the nanny’s pay. You pay half of that (7.65%) as their employer, and the other half is usually taken out of the nanny’s check.

You may also owe Federal Unemployment Tax (FUTA) if you paid household employees a total of $1,000 or more in any calendar quarter of 2025 or 2026. FUTA is 6% of the first $7,000 of wages per employee, but a credit of up to 5.4% can reduce the effective rate to 0.6%.

To know exactly what you are obliged to pay, take a look at our guide, The 2026 Tax Checklist.

The Fair Labor Standards Act (FLSA) requires you to keep the records of your nanny's work. What it means, precisely, is how many hours they worked for you and how much they got paid for it. You have to be able to provide such info about your nanny for at least three years of her work.

Workers’ compensation requirements for household employers vary by state, including coverage thresholds and exemptions. Check your state workers’ compensation agency to determine whether coverage is required for your nanny.

And if you want to take good care of your own health, don’t forget to check the Top 5 Healthcare Documents You Need.

Feeling a bit overwhelmed by all of the information above? Here is a short step-by-step instruction on how to manage hiring a nanny.

Remember that you also need to check out IRS Publication 926 to be aware of the ongoing financial thresholds and reporting laws.

Learning how to hire a nanny is a process that requires a lot of patience and specific knowledge, so you have to be prepared. But you can create a stable and professional environment for your family and your new caretaker if you follow the legal requirements carefully.

Whether you are figuring out how to hire a live-in nanny or a part-time caretaker for just a few hours weekly, it is best to support them with all the legal support so they can take good care of your kids.

Following the tips above can lead you to a smooth and clear hiring process and bring the best nanny to your house.