Everything You Need To Know About The Best Nanny Payroll Services 

Overview

Did you know that you automatically become a household employer if you hire someone to work at your home?

Even if you only hired one worker, you might still need to pay a nanny tax. This tax isn’t just for nannies but also applies to other household workers: housekeepers, gardeners, elderly caregivers, personal assistants, drivers, etc.

So, how can you comply with wage, labor, and tax laws to avoid costly fines and penalties?

If you’re not an accountant, calculating deductions and benefits, preparing the tax documents, and filing them with the IRS (Internal Revenue Service) can be a difficult and daunting task. Thankfully, you can get help from the best nanny payroll services, so you’ll have one less thing to worry about.

Aside from calculating nanny taxes, these service providers also offer payroll options, including check writing or direct deposits.

What Payroll Services Do Nannies Use? Main Differences

There are many nanny payroll services to help you calculate your workers’ wages and taxes.

Some provide automated services, while others even help you with tax filing through their comprehensive plans.

Let’s review our top 15 nanny payroll providers to find out which one is right for you:

Sure Payroll

• Sure Payroll may be the pioneer in providing flexible, affordable, and hassle-free online payroll services for small businesses.
• Offers customized guidance from in-house tax experts so you can stay compliant with tax laws.
• They also have a tax penalty guarantee, so you’ll never have to pay fines or fees if they make mistakes in their calculations.
• They offer a 30-day free trial.

Paychex

• Paychex offers tax filing guarantee and benefits add-ons, such as health insurance benefits and workers compensation insurance.
• Provides easy mobile access with a user-friendly app.
• Offers 401(k) options.
• US-based customer service team that’s available 24/7.

Savvy Nanny Payroll Services

• Charges one flat rate for up to two employees.
• Puts your withholdings into a separate account allocated for taxes every pay period so you won’t be paying for your taxes with a lump sum at the end of the year.
• Has extended customer service hours.

Nanny Chex

• Sets up all employer accounts and federal EIN (employer identification number), regardless of your plan.
• Provides a comprehensive, full-service plan with a dedicated personal account representative so you’ll always find assistance from the same person who might be more familiar with your account.
• Unlimited technical assistance, with free initial consultations.

Payroll by Wave

• Offers flexibility so that you can suspend your payroll for months when you don’t have employees without closing your account.
• Provides unlimited ‘concierge services’ with chat, email, and call support.

Simple Nanny Payroll

• An affordable DIY (do it yourself) service that only costs $29 per year.
• Free 30-day trial even if you don’t have a credit card.
• But it’s only a basic service that offers nanny tax calculations, with limited customer service (using a website form or email; no chat or call support) for tax resources in case you need help with the calculator.

Poppins Payroll

• Colorful, fun-looking interface that’s easy to use.
• Offers a sample nanny contract template that you can download for free.
• They’re always transparent about their services and fees — and your first month is free.
• No extra charge for quarterly or year-end tax filing.

GTM Payroll Services

• Helps you set up employee benefits, including travel insurance and retirement plan options for your household employees using the payroll software.
• Guarantee for no tax penalty.
• More expensive than other services and requires a six-month contract.
• Offers employee dishonesty insurance.
• Insurance brokers are only available in 29 states.
• Free initial phone consultation.

HomePay by Care.com

• Provides ‘concierge support’ with unlimited chat, phone, and email support.
• Offers resource guides and budgeting features.
• It also offers HR (human resource) assistance.
• Offers a ‘happiness guarantee’ refund if you’re not happy with their services within your first six months as a customer.

NannyPay

• Prepares pre-filled year-end tax forms.
• Plans start at just under $150 per year.
• This is just a basic nanny payroll service that can calculate your nanny’s salary and taxes but can’t file them for you.
• Despite being a basic plan, it still offers printing of checks and pay stubs, data storage, and organizing crucial tax documents.

Homework Solutions

• Provides you with a dedicated account representative, with unlimited telephone consultations.
• Performs employee background checks on your behalf.
• Guarantee for no tax penalty and works in all 50 states.

Nanny Lane

• Simple payroll processing, but the service setup can take up to two weeks.
• Automated payroll processing with just a weekly email input from you.
• You can choose multiple pay rates for your employees.

Heart Payroll

• Customized pricing options.
• Assigns a dedicated payroll expert to your service plan.
• Provides precise tabulations of all payroll and employer tax calculations.
• Offers direct remittance of monthly and quarterly tax preparations.
• Offers tax filing.
• Unlimited phone support.
• Provides audit support.

Patriot

• Low-cost nanny payroll software if you need help with payroll and tax calculations.
• Unlimited pay runs.
• Live phone support.

Payroll4free.com

• Free services, including calculations for household employee tax payments and preparation of direct deposit checks.
• Low fees for full-service features, but can’t run automated payroll.
• Compatible with many accounting programs, but only works on Windows operating systems.
• The free software contains ads that some might find distracting.
• Unlimited live US-based customer service with call or email support.
• Ability to set up 401(k) deductions and contributions.

Summary & Recommendation

Each of these nanny payroll service providers has its pros and cons. It’s up to you to pick the one that best suits your nanny payroll needs and budget.

We recommend the following best nanny payroll services:

Best overall winner

• Sure Payroll

Best general payroll service you can also use for nanny payroll

• Paychex

Best budget-friendly service for hiring up to two employees

• Savvy Nanny Payroll Services

Best automated, pay-as-you-go service

• Nanny Chex

Economical, cheapest, and simple to set up

• Payroll by Wave

Best DIY tools with an affordable software

• Simple Nanny Payroll

Most colorful, user-friendly system

• Poppins Payroll

Best for setting up benefits

• GTM Payroll Services

Best in tech support

• HomePay by Care.com

Best for more than three employers

• NannyPay

Complete service and great customer support

• Homework Solutions

Simple payroll processing with dedicated personal assistant

• Nanny Lane

Best service provider for customized pricing options

• Heart Payroll

Low-cost nanny payroll software with own accounting software

• Patriot

Best free software with lots of options

• Payroll4free.com

Continue reading if you want to know more about each service.

Key Features

Sure Payroll

Pricing/Packages

• $49.99 per month to use SurePayroll services for one household employee.
• It offers a 30-day free trial.

Additional costs

• $10 per month per person for additional staff.
• $9.99 per month to calculate and file payroll taxes in two or more states.
• $9.99 per month to calculate and file local taxes in Ohio and Pennsylvania.
• $4.99 per month to integrate payroll services with your accounting software.
• $4.99 per month plus $3 per employee for time clock integration.

Key features

• Comprehensive, simple, and fully automated.
• It calculates, deducts, and files nanny taxes (plus Social Security, Medicare, and unemployment taxes), then automatically pays your nanny via direct deposit.
• Auto payroll feature: you don’t have to remember to pay your employee on time because the software does it automatically.
• Tax filing guarantee: the taxes it helps you calculate (or the taxes it files for you) are accurate. If they aren’t, SurePayroll deals with the IRS and pays all associated fines and fees.
• New hire state reporting within 20 days of your new worker’s start-of-work date.
• User-friendly mobile app (for paying nannies on the go).
• Solid US-based customer service support: 7 am to 8 pm CST during weekdays, with limited hours on Saturdays.
• A mobile app that’s available compatible with both iOs and android systems for you and your employees.
• Provides Schedule H (Form 1040 or 1040-SR) for your yearly taxes.
• Compatible with accounting software such as AccountEdge, Intuit QuickBooks Online, Sage 50-US, Less Accounting, Intacct, and Xero.

Savvy Nanny Payroll Services

Pricing/Packages

• $40 flat monthly fee for Savvy Nanny services up to two employees.

Additional costs

• $6 per month per person for additional staff.
• $50 for the year-end tax filing fee.
• No setup fees.
• No hidden fees.

Key features

• It uses “payroll impounding” to put your withholdings into a separate account for taxes every pay period, so you can have money to pay the taxes at the end of the year without worrying about the lump sum.
• Runs payroll and processes your taxes.
• Requires you to enroll in a direct deposit account to prevent late tax payments.
• Emails pay stubs to your employees.
• Can pay some municipalities through their system (like NYC) but not all (such as Philadelphia).
• Prepares W2 forms (wage and tax statement) and requires you to print and distribute these to workers.
• It lets you handwrite paper checks if you want to.
• The software integrates with QuickBooks Online.
• Phone, email, and live chat support, available six days a week: 7 am to 8 pm CT during weekdays, and 9 am to 1 pm on Saturdays.

Paychex

Pros

• Decent customer service with 24/7 live online support.
• Systems and software compatible with third-party integrations.
• Offers online and mobile payroll processing.
• Payroll funds can be electronically deposited.
• Handles preparations and filing of state and local taxes.
• Offers a mobile app.
• Has a tax filing guarantee.
• Offers benefits add-ons for health insurance and workers compensation insurance.
• Offers 401(k) options.

Cons

• You need to pay for year-end tax report preparations and online delivery of W2s and Schedule H.
• It doesn’t file federal taxes for nanny payroll. It’s more of a general payroll service that you can configure for the nanny payment service.
• More expensive than other services.
• Extra features also cost more.
• It can be complicated to set up and use.

Positive Reviews

“I like the customer service and ease of use the best. The online dashboard makes it easy to find all the reports I need for payroll. It’s also nice that employees have access to their own pay stubs and W2s.” – Reviewer on the Paychex website.

Negative Reviews

“Constant tax and PTO errors. Over the past 5 years, we have struggled with the fact that on three separate occasions, Paychex has dropped the ball with respect to paying our taxes, and we have been fined on each occasion. No compensation was offered, and we had to do most of the legwork to fix the problem.” – Reviewer on G2.com.

Nanny Chex

Pricing/Packages

• Full service: $80 per quarter.

Additional costs

• $6.25 payroll processing per weekly check.
• $12.50 per bi-weekly, semi-monthly, or monthly paychecks.
• For the ‘taxes only’ plan: $125 for quarterly tax filing, $195 for year-end tax preparation.
• For the ‘full service’ plan: $150 for year-end tax fees.
• No monthly flat rate.
• No hidden fees.

Key features

• Nanny Chex sets up all employer accounts and federal EIN, regardless of your service plan.
• Payroll service that’s easy to use.
• You must input some details for the setup: your full name, your birthday, your nanny’s name, pay frequency, etc.
• The company assigns a dedicated personal account specialist who helps with everything you need about your nanny’s payroll, nanny tax details, and year-end tax details.
• The tool offers simplified reports that feature your employee’s working hours.
• Payroll process automation: Almost all features provided by Nanny Chex are automated, even for users who select the ‘Taxes Only’ payment plan.
• Automated paycheck calculator integrated into employee’s account to help you determine how much to pay your workers.
• Prepares and submits new hire state reporting.
• Remits all tax filings and payments.
• Maintains all payroll and tax records.
• Unlimited free assistance from your personal account specialist to process employee’s payroll, taxes, and year-end tax information.
• Pay as you go with no prepayment required.
• Tracks your employees’ sick leaves, vacation leave, and PTOs (paid time off) at no additional charge.
• Handles all correspondence from tax agencies.
• Handles employment verifications, worker’s compensation audits, unemployment insurance claims, and relevant tasks at no extra charge.

Payroll by Wave

Pricing/Packages

• Full service (new payroll subscription in states with available tax payments and filings): $35 monthly base fee.
• Self-service (new payroll subscription in all other states): $20 monthly base fee.
• It offers a 30-day free trial.

Additional costs

• $6 per month per active employee.
• $6 per month per contractor paid.

Key features

• Allows plan suspension (without closing your account) on months when you don’t have workers, so you don’t pay the monthly fee if you aren’t using the service.
• 100% payroll accuracy guaranteed.
• Unlimited free direct deposits.
• Automatic tax filings and payments.
• Hassle-free system to pay yourself, your employees, or your contractors.
• Seamless integration with free Wave Accounting software.
• It helps keep track of your cash flow with wage and tax payment reporting.
• Integrated employee portal for access to vacation leave monitoring, pay stubs, and tax forms.
• Full employee management with ROE forms (Record of Employment), top-ups, benefit calculations, and more.
• Easy access for managing tax forms.
• Live chat support during weekdays, plus email support.

Paychex

Pricing/Packages

• Express payroll: $59 per month.
• Flex select: $90 per month.
• Flex pro: $158 per month.
• Paychex flex enterprise plan (for users who need custom-tailored features or have a large number of employees).

Additional costs

• No additional fees.

Key features

• It helps set up your tax ID.
• Submits new hire reporting forms.
• It helps run payroll and file state tax payments.
• 24/7 US-based customer service team.
• The portal allows you and your employees to enter payroll data.
• Prepares and files year-end tax reports.
• It lets you manage payroll with a mobile app.
• Has an in-house insurance agency you can use to offer benefits such as workers compensation insurance and health insurance.
• Many calculation tools.
• Creates analytics and reports.
• Employee self-service options.

Simple Nanny Payroll

Pricing/Packages

• $29 flat rate per year, regardless of the number of employees.
• It offers a 30-day free trial.

Additional costs

• No additional fees.

Key features

• Nanny tax calculator.
• Tax preparation tools.
• Reports dashboard.
• It helps calculate nanny taxes and prepare the documents but doesn’t file them for you.

Poppins Payroll

Is Poppins Payroll legit?

• Yes, Poppins Payroll is a legit service that you may use for your nanny payroll needs.

How Much Does Poppins Payroll Cost?

• $45 per month.
• The first month is free.

Additional costs

• No additional fees.
• No contract fee.
• No hidden fees.

Key features

• It helps set you up as an employer and get a federal employer identification number with the IRS.
• Registers and files new-hire paperwork with state agencies and any local municipalities.
• Calculates appropriate withholding taxes for each paycheck and the amounts due to each government agency.
• Keeps you updated with any changes in tax laws.
• Coordinates direct deposit from your account to your employee’s account.
• It lets you know the amount of your employees’ paycheck if you prefer making the checks.
• Keeps track of all the tax rules and deadlines to always pay your taxes to the proper agencies on time, with guaranteed total accuracy.
• Prepares, files, and pays all your taxes automatically online (available only in the states that allow it).
• It helps you set up your own PTO (paid time off) and sick leave policies.
• It keeps track of the PTO and sick leave balances, and includes them on the pay stubs emailed to your employees.
• Maintains a digital ‘filing cabinet’ of all your tax and payroll documents for five years.
• Intuitive interface and dashboards for management and printing of your records.

GTM Payroll Services

Pricing/Packages

• $65 per month with a 6-month minimum commitment required.

Additional costs

• $95 one-time setup fee.
• $20 fee per month for each additional employee.

Key features

• Free initial phone consultations.
• Tax filings and automated withholdings.
• Year-end tax preparation.
• Simple payroll setup with online updates.
• Integrates additional benefits, including 401(k) plans, health insurance, travel insurance, employee dishonesty insurance, and workers’ compensation insurance.
• Nanny background checks.
• Mobile app so you can enter your nanny’s hours anytime, no matter where you are.
• Standby customer service agents to help you with any process from 8:30 am and 8 pm ET during weekdays.
• Licensed insurance brokers are available in 29 states.

HomePay by Care.com

Pricing/Packages

• $75 per month (billed quarterly) with a six-month money-back guarantee and service guarantee.
• It offers a 30-day free trial with no hidden fees or commitments.

Additional costs

• $100 for the year-end tax filing fee.
• No setup fees.

Key features

• Prepares and files all required tax returns with no hassle.
• Runs payroll on a schedule that you can access from any device.
• Provides HR support to keep you on top of household employment requirements.
• Runs the numbers for budget planning and helps you maximize tax breaks.
• Offers ‘concierge support’ with unlimited chat, phone, and email support.
• Offers audit assistance.
• It also provides technical and onboarding help for your employees.
• Offers happiness guarantee refund if you’re not happy within your first six months as a customer.

NannyPay

Pricing/Packages

• $149.95 per year flat rate for one to three employees.
• 14-day money-back guarantee.
• Offers a risk-free 30-day trial.

Additional costs

• No additional fees.

Key features

• Calculates taxes for your nanny, housekeeper, babysitter, personal assistant, or any household employee.
• Maintains all your nanny tax payroll records.
• Software is available as desktop or cloud (online) software.
• Complies with nanny tax laws.
• Offers a household employer’s guide.
• Calculates federal and state taxes, with social security and medicare.
• Prints both W-2 and W-3 (transmittal of wage and tax statements).
• Prints comprehensive pay stubs.
• Automatic data backups.

Homework Solutions

Pricing/Packages

• Essential/Basic: $150 per quarter.
• Complete: $220 per quarter for bi-weekly payroll and $225 per quarter for weekly payroll.

Additional costs

• $100 for initial setup.
• $100 for the year-end tax filing fee.
• $60 per quarter per employee.

Key features

• Tracks net pay.
• Distributes pay stubs.
• Complies with IRS requirements.
• Responds to the IRS and state inquiries on your behalf.
• Prepares and files year-end tax returns.
• Offers full payroll and tax filings.
• Processes payroll even without your input.
• Guarantees accuracy of their work.
• Concierge quality customer service with phone support from 8:30 am to 7 pm ET during weekdays.

Nanny Lane

Pricing/Packages

• $55 per month.

Additional costs

• No setup fees.
• No additional tax filing fees.
• $25 per month per additional employee.

Key features

• Full-service payroll.
• Registers you as a household employer with the IRS so you can legally pay your household employees.
• Completes federal and state tax filings: monthly (nanny income tax, social security taxes, and medicare) and quarterly (unemployment taxes).
• Produces and submits year-end documents: W-2 and W-3 (transmittal of wage and tax statements).
• Transfers payments by direct deposit to workers on your chosen pay cycle.
• It offers automated payroll calculations with just a weekly input (through email) from you. They’ll pay your nanny the default amount if you don’t send them an email.
• Sends pay stubs and receipts to you and your employees.
• Calculates deductions of federal and state taxes on pay stubs.
• Provides support with a dedicated nanny payroll representative.
• Quarterly tax filings.

Heart Payroll

Pricing/Packages

• $79.99 per month.

Additional costs

• No registration fees.
• No hidden fees.

Key features

• Assigns a dedicated payroll expert to your service plan.
• Creates direct deposits to your workers’ accounts.
• Provides precise tabulations of all payroll and employer tax calculations.
• Produces and files tax slips, including W-2s.
• Releases electronic pay stubs and receipts every pay period.
• Offers direct remittance of monthly and quarterly tax preparations.
• Offers tax filing.
• Unlimited phone support.
• Provides audit support.

Patriot

Pricing/Packages

• Basic plan: $14 per month for one employee.
• Full service: $34 per month for one employee.

Additional costs

• $4 per month per employee.

Key features

• Runs payroll calculations.
• It lets you sign up for full-service payroll or choose DIY (basic plan) to file your taxes to save money.
• Unlimited pay runs.
• Two-day direct deposit.
• Can pay using manual checks or direct deposits.
• Live phone or chat support.
• Integrates with popular accounting software such as QuickBooks.

Payroll4free.com

Pricing/Packages

• Zero cost (free) for most services.
• $15 per month to include paperwork filing for your taxes or making payroll tax deposits.

Additional costs

• $15 per month to use Payroll4free.com’s bank to pay your nanny.

Key features

• The software tracks vacation, sick time, and PTO (paid time off).
• Generates reports for earnings, taxes, and benefits.
• Provides employee portal to access pay stubs and W-2 forms.
• Payroll processing for direct deposits or paper checks.
• Calculates and fills out your state, local, and federal forms.
• Unlimited live customer service with call and email support.
• Ability to set up 401(k) deductions and contributions.
• Integrates with Intuit QuickBooks and other accounting programs.
• Can print checks from the software.

Pros & Cons

Sure Payroll

Pros

• Two-day debit period (only holds your payroll money for only two days, unlike other companies).
• Well rounded and reputable.
• Full-service tax calculation and filing.
• Unlimited and automated payroll processing.
• Comprehensive reporting.
• Mobile app for payroll on the go.
• It offers a 30-day free trial.
• Tax penalty guarantee.
• No contract is required.
• Easy to use.
• Set up in five steps that are usually completed in under 45 minutes.
• Customer support between 8 am and 9 pm ET on weekdays and from 10 am to 2 pm ET on Saturdays.
• The online help center is available 24/7.
• Compatible with various accounting software.

Cons

• Higher base price than some competitors.
• It can get costly for multiple employees.
• Extra fees for accounting integrations.
• Additional fees for Ohio and Pennsylvania residents.
• Doesn’t offer health insurance or retirement benefits.
• Frequently requires a verification code sent to your phone before you can fully access the payment tool.
• Charges a fee for payroll cancelation after it’s submitted.

Positive Reviews

“Perfect for small business owners! It was easy to set up my account and create my payroll. I can easily pay myself and add employees when I am ready to hire. I can adjust the dates for the check and the amounts and pay an extra check as needed. It has easy-to-understand explanations and multiple links to integrate into accounting software. I can sign in to check on my statistics, and they send in the quarterly taxes for me. They send me reminders so I stay on track for approving my payroll before it is sent, and there is an option to approve payroll early. One of the best features that make the tax filing easier is that I can integrate with my accountant! Oh, and the price: unbeatable!” – Reviewer on G2.com.

Negative Reviews

“I don’t like being charged to cancel a payroll immediately after it is submitted.” – Reviewer on Capterra.

Savvy Nanny Payroll Services

Pros

• Affordable plan with a $50 year-end filing fee.
• User-friendly interface.
• No contract required.
• Capabilities for direct deposit and manual checks.
• Can pay multiple employees (up to four employees) for a single fee, plus a low fee for additional employees.
• Sends employee pay stubs to your employee via email.
• Customer service that usually responds within 24 hours.
• Uses “payroll impounding” for withholdings.
• Transparent about fees and charges.
• Available in all 50 states.

Cons

• Charges error fees, insufficient funds fees, payroll reruns, and document access.
• Charges year-end filing fee.
• Additional fees for payroll changes, document requests, and other extra services.
• Fewer services than competitors.
• It doesn’t help you apply for an EIN.
• Software services are not available in all states.
• It doesn’t file taxes for all regions in the US.
• If you live in areas not covered by their full filing service, it doesn’t offer tax setup and filing assistance, only sends reminders when your tax is due.
• No mobile app.
• It doesn’t have time-tracking features for monitoring your household employee’s work hours, vacation leaves, sick time, and PTOs.
• No self-service portal for your workers to view their pay stubs and other documents.

Positive Reviews

“I have used this service for three years to pay my cleaners. It makes it so much easier to hire someone. They have great service, there is a human you can contact if you need to, but you likely will not need to. The website is quite organized and makes it simple to do all tasks. I would recommend becoming an electronic filer right away. Once that is in place, you get reminders, push a button and have a great archive of everything.” – Reviewer on Womply.

Negative Reviews

“I tried Savvy Nanny, and it was way too DIY. I couldn’t figure it out.” – Reviewer on Reddit.

Nanny Chex

Pros

• Comprehensive nanny payroll services.
• Offers free initial consultations.
• Easy payroll setup, even if you’re a beginner.
• Works in all 50 states and also handles all local taxes.
• Dedicated account specialist for your plan, with unlimited live tech customer support via phone.
• No contract is required.
• No setup fees.
• Assists in applying for employer accounts and federal EIN setup.
• New hire reporting.

Cons

• Customer service is only available from 7 am to 5 pm.
• It offers fewer customizable features compared to other providers.
• Pricier than other self-service and DIY software options.
• No mobile app.
• Extra fees are charged for payroll processing.
• No self-service portal for your employees.
• Limited reporting.
• More costly ($195) year-end tax preparation fee.
• It doesn’t offer workers’ compensation insurance.
• Complex fee structure.

Positive Reviews

“Excellent service! NannyChex made the payroll and taxes easy for me. They were very friendly and helpful every time I called, and they literally took care of everything for me! I strongly recommend them!!” – Reviewer on Birdeye.

Negative Reviews

“I found inaccuracies in both my 2016 and 2017 returns. When I questioned the accountant on the calculation of my 2017 penalties, he pushed back, saying he has “100% certainty” that both the IRS and State penalties and interest are calculated correctly. I did not agree, so I did not pay interest on my State return and decided to wait for them to bill me. Well, it turns out I was correct about the State return interest. The accountant made a nearly $200 error in interest, and the real number was about what I said it should be.” – Reviewer on Yelp.

Payroll by Wave

Pros

• User-friendly dashboard.
• Less expensive than some nanny payroll providers.
• Solid customer service with unlimited chat, phone, and email support.
• Free 30-day trial.
• Offers workers compensation options.
• 100% guaranteed accuracy.
• Offers temporary payroll suspension if you need it.
• Offers audit assistance.
• Provides technical and onboarding help for your employees.

Cons

• It doesn’t offer as many features as other nanny payroll services.
• Full-service only available in 14 states.
• No automatic payroll processing.
• No mobile application, only available as a web-based application.
• No third-party integrations.
• Software tends to lag as data and employees grow.
• No overseas or foreign payroll business rules and setup.
• Limited breakdown on benefits and bonuses to help determine if things are taxable.
• Only offers full service with tax filing if you live in these states: New York, Washington, Arizona, Georgia, Illinois, Indiana, Minnesota, North Carolina, Tennessee, Texas, Virginia, Wisconsin, California, and Florida.

Positive Reviews

“Wave makes payroll simple and easy to manage. Their support is great, and they stay up to date with COVID grants, taxes and basically make it, so we don’t have to think about it. Wave gives employees direct access to their key documents, pay stubs, etc., which is really important to the modern workforce. Printed tax receipts and stubs should be a relic of the past.” – Reviewer on G2.com.

Negative Reviews

“It is not very flexible. Certain things, such as the inability to select individuals to process their pay bugs me. The only time you can do that is if the employee is terminated. Where it gets confusing is if you terminate someone after payroll has been submitted. Then we need to make manual adjustments. Also, their system does not have the feature to send us an email on the day payroll needs to be submitted. Instead, it sends it out 2 days ahead of time and not again on the day of. The last thing I dislike is the lack of reports that I can generate, for example, departmental allocation.” – Reviewer on G2.com.

Simple Nanny Payroll

Pros

• Inexpensive platform.
• User-friendly dashboard.
• Risk-free 30-day free trial.

Cons

• Only a few features or services are offered.
• Limited customer service: you can only use a contact form if you have questions because they don’t have a customer service number you can call.
• Fully DIY due to lack of customer support.

Positive Reviews

“Simple Nanny Payroll is good. It’s a DIY service.” – Reviewer on Reddit.

Negative Reviews

“Simple Nanny Payroll isn’t a full-service payroll option.” – Reviewer on Tomanettis.

Poppins Payroll

Pros

• No minimum contracts.
• Quick and easy setup.
• Customer service rated as outstanding.
• Low rates.
• Offers many services and features.
• Good reviews from other actual users.
• Provides a free nanny contract template that you can download.

Cons

• Lacks integration features with third-party software.
• No check printing.
• No mobile app.

What States Have Poppins Payroll?

• Only offers their services in 13 states: California, Colorado, District of Columbia, Florida, Georgia, Illinois, Maryland, Massachusetts, North Carolina, Texas, Virginia, Washington, and New York.

Positive Reviews

“Worth every penny and SO EASY to set up! Customer service was top-notch. I emailed their team directly with random questions all the time, and they always responded within hours.” – Reviewer on Poppins Payroll’s Facebook page.

Negative Reviews

“My FSA (through WageWorks) keeps denying my claims, saying pay stubs aren’t receipts. They’re making me fill out their claims form and having it signed. I just wanted to mention that in case others have that problem. Maybe you could generate a different style receipt quarterly?” – Reviewer on Poppins Payroll’s Facebook page.

GTM Payroll Services

Pros

• Easy to use.
• Free initial phone consultation.
• Offers many options and services, including a tax-savings program, workers’ compensation insurance, and travel insurance.
• 100% filing guaranteed.
• Customizable.
• Integration features with other accounting software.
• Can coordinate with your employee’s health, vision, and dental insurance.
• Accredited with licensed insurance brokers in 29 states.

Cons

• It can get costly with more employees.
• Requires a six-month commitment.
• No free trial.
• Lacks reporting tools.
• Customer service is bad as per reviews.

Positive Reviews

“From taking a look and reviewing our contract in detail, to troubleshooting difficulties we were having with our nanny, to walking me through the complexities of the CARES Act as it applies to household employers, to explaining how we could let our nanny go, Matt was a trusted advisor who was willing to spend hours on the phone with me, patiently answering every question I had. Matt is the best at what he does, and I am so grateful for all his help.” – Reviewer on Yelp.

Negative Reviews

“Signing up online was pretty easy, but everything after that has been a complete struggle. There is no clarity or direction around what your employee will see, how they will enter hours or anything that is given to them following sign-up. They have been incredibly hard to get a hold of and not clear with answers to any of my questions. I’ve tried calling and using their chat feature on their website and have received no response during normal business hours. I really wish I had read reviews of this company before signing up and am instantly regretting giving them my business.” – Reviewer on Yelp.

HomePay by Care.com

Pros

• Offers many features to take the guesswork out of taxes.
• It can be helpful if you’re a part of Care.com.
• Compatible with any device.
• Service and money-back guarantee.
• No commitments.
• Excellent customer service/support.
• Offers a refund (only within the first six months) if you’re not happy with their service.

Cons

• It could be more expensive than other nanny payroll companies.
• No integration tools with third-party software.
• Lacks benefit management services.
• Taxes are only withdrawn from your account quarterly or until it’s time to remit, so it might make budgeting more difficult because you have to pay in a lump sum.

Positive Reviews

“I had a very complicated nanny situation, but Dana worked with me for months (even staying late) to help me get the taxes in order correctly! She was so nice and really put me at ease. I very much appreciated all her hard work! FIVE STARS!” – Reviewer on Care.com HomePay’s Facebook page.

Negative Reviews

“Never again will I use HomePay. The payroll system was nice but not practical. They pull money from your account two days prior to the actual pay cycle, which made it difficult to have my paychecks line up with their system. Once I canceled my account with them and decided to take on the responsibility of paying all taxes and fees, I never received proper instructions nor login information to appropriately access the websites to pay the taxes owed.” – Reviewer on Yelp.

NannyPay

Pros

• Cheaper rate than most providers: $150 per year for three employees.
• No hidden fees.
• 14-day money-back guarantee.
• Online (cloud-based or web-based) and desktop versions.

Cons

• No automatic tax filing.
• No direct deposit.

Positive Reviews

“It takes the headache out calculating nanny taxes! Pros: You can’t really beat the price. Compared to other payroll services, this is a fraction of the cost of competitor sites/services. NannyPay also allows you to print out W2 and Schedule H forms that are ready to sign and ship to your CPA (If you have one).” – Reviewer on Birdeye.

Negative Reviews

“The info available to get it set up and do ongoing reporting and tax filing isn’t super helpful. It’s hard to feel very confident that it’s all correct when there isn’t much in the way of explanation available in the software, their website or help section. I actually have my accountant double-check everything when I file my annual taxes.” – Reviewer on Capterra.

Homework Solutions

Pros

• Guarantee for no tax penalty.
• Customized service.
• Sends text alerts when tasks are completed.
• Easy to use.
• Assigns dedicated customer service to your account, with unlimited telephone consultations.
• Performs employee background check.

Cons

• No tracking services for vacation or other leaves.
• No mobile app.

Positive Reviews

“We have used HWS for six years for our nanny, and they have done an amazing job. I just regret not hiring them for the first two years we employed our nanny! Even though COVID and all the confusion of the new tax laws, they were there every step of the way and made payroll work effortlessly. I highly recommend them.” – Reviewer on Trust Pilot.

Negative Reviews

“I am a long-term customer of HomeWork Solutions. Unfortunately, my 2017 tax forms were mishandled and given to me late. HomeWork Solutions was late preparing and sending me my tax forms. I faced myriad delays. I reported wages on January 8th; all information was complete and final by January 12th, before the company’s deadline. I followed up and paid during mid-January my balance due, emailing and calling several times about my forms. I only received my documentation in mid-February (past the DC Government deadline) and only after writing and calling multiple times. I incurred $232.06 in fines for tardy submission of documentation and payment.” – Reviewer on Better Business Bureau.

Nanny Lane

Pros

• Full-service payroll.
• Handles nanny interview process.

Cons

• No check printing service.
• No mobile app
• No direct deposit.
• No integrations with other software.

Positive Reviews

“Thank you so much. I have recommended your service to a colleague who has had success with you as well. I will continue to spread the good word.” – Reviewer on Nanny Lane’s website.

Negative Reviews

“I have an urgent issue with my payroll experience, and we cannot get anyone from Nanny Lane to respond via email.” – Reviewer on Reddit.

Heart Payroll

Pros

• Provides ROE (record of employment) forms.
• Processes direct deposit payments.
• Customized pricing options.
• Customer support is rated by users as great.

Cons

• No check printing service.
• No mobile app.
• No integrations.

Positive Reviews

“So happy with the prompt responses to questions and helping me manage all of the paperwork involved in hiring and paying a nanny. They even completely managed my nanny share, which was a 50/50 split. I didn’t have to worry about filling documents with the government. They did it all! I would definitely use HeartPayroll again.” – Reviewer on Heart Payroll’s Facebook page.

Negative Reviews

“It is very hard to get in touch with my specific payroll representative when I call in. I always get sent right to voicemail.” – Reviewer on G2.com.

Patriot

Pros

• Low-cost software that integrates with popular accounting software.
• Unlimited pay runs.
• 2-day direct deposit.
• Live phone support.

Cons

• Limited reporting.
• Only the full-service plan has year-end report prep.
• It doesn’t help set up your employer tax ID from the IRS.

Positive Reviews

“Intuitive, flexible, suits all my needs, takes care of the IRS, W2s, 1099… I love it. It would cost me four times as much to even think about having a bookkeeper do this for me. Excellent for small nonprofit and for entrepreneurs.” – Reviewer on Software Advice.

Negative Reviews

“If I wanted to cancel a payroll that hadn’t fully run yet, it still showed up on my employee portal when they logged in. I simply just wanted to correct the hours that I fat-fingered but could only cancel it, not correct. I also didn’t like that I needed to link up a business account to get the direct deposit to work. I never really understood why I couldn’t just use my personal checking, especially if I only have one employee.” – Reviewer on G2.com.

Payroll4free.com

Pros

• Offers various free services, including payroll processing, direct deposits, leaves and PTO tracking, and preparations of tax forms for filing.
• Ability to set up 401(k) deductions and contributions at no cost to you.
• Affordable rate for full-service options.

Cons

• It doesn’t have many online resources.
• It only works on Windows operating systems.
• The free software contains ads that can be distracting.

Positive Reviews

“It solves our problem and works well enough to where we have continued to use it. A basic level payroll provider like this would usually charge a minimum of $30-40 a month, and usually a per-employee cost too. When I first set it up, I did all of the calculations myself and compared them to the reports that it generates, and they were all spot on, so I’m pretty happy with it.” – Reviewer on Capterra.

Negative Reviews

“This software was terrible every step of the way. It’s not cloud-based, and there’s not even a Mac version, so I literally had to buy a PC to be able to run it. I only did so because it was “Free” (turned out not to be free as the name implies). It was like logging into software from the 90s. Horribly slow, hard to use, terrible interface. I dreaded running payroll every week. I only stuck with them because our number of employees was so low.” – Reviewer on Capterra.

Nanny Payroll FAQs

What are the Best States (and Worst) for Working Parents?

Hiring a nanny can help with your child care needs, but most working parents might also want to spend time with their children.

Factors that make a state better for working parents:

• Lower unemployment rate
• Lower cost of living so parents’ income can cover the cost of housing
• Family-friendly legislations: paid family leaves, paid medical leaves, and job-protection leaves

States with all three family-friendly laws are:

• California
• District of Columbia
• Massachusetts
• New Jersey
• New York
• Rhode Island
• Washington

Of these states, the District of Columbia ranks as the best state for working parents because of its lowest unemployment rate change (+3.4%) from 2019 to 2020. (1)

It also has the lowest ratio (27.1%) of rent vs. household income. This factor is considered important by the U.S. Census Bureau because parents with a lower rent-to-income ratio might not have to work as many hours daily to cover their family’s basic needs.

What is a “Nanny Tax”?

When you hire someone to work for you at home, you become a household employer and will need to pay a “nanny tax”.

The term is actually used not just for nannies but to mean the employment tax of anyone who works in a household. Thus, this colloquial term also applies to gardeners, maids, personal assistants, drivers, housekeepers, elderly caregivers, and anyone who works at your home.

To pay for the nanny tax, you’ll need to withhold a certain amount for Social Security, Medicaid or Medicare, and income taxes from your workers’ pay.

How Much are Nanny Taxes?

Types of nanny taxes:

• FICA tax: you and your employee pay this tax
• FUTA (Federal Unemployment Tax) tax: only employers pay this tax, not your workers.

Tax calculations vary each year, depending on updates to state and federal laws. But for the 2021 tax season, calculations are as follows:

• FICA taxes: Social Security tax is 6.2% per paycheck and Medicare tax is 1.45% per paycheck.
• FUTA taxes: 6% of your employee’s first $7,000 salary (if they earn more than $1,000 in a quarter).

You’ll need to match your employee’s FICA taxes out of your pocket.

Note that only employers pay the FUTA taxes; you can’t deduct these from your nanny’s paycheck. But household employers never pay more than $420 in FUTA taxes per employee.

Do I Have To Pay a “Nanny Tax”?

You can’t declare your household employees as independent contractors because they don’t control their work.

As a household employer, you’re required to withhold and pay a “nanny tax” if you pay your household worker $1,000 or more in a calendar quarter or $2,300 or more in wages every year.

Note that if you’re not paying your workers that much, you won’t be subject to a federal employment tax. But you might still need to pay for state tax.

Also, if your nanny or worker is a family member, you probably don’t have to pay for nanny tax. But they still have to report this income in their tax return.

The IRS (Internal Revenue Service) will expect these nanny taxes paid along with your personal taxes, calculated up to the end of each tax year.

You’ll need to file a 1040-ES for quarterly nanny taxes and the Schedule H (Tax Form 1040 or 1040-SR) for household employment taxes at the end of the tax year.

Is it Alright to Pay My Nanny Under the Table?

Some people might try to pay their nanny under the table to save them both some money. But that’s risky and illegal!

If you don’t pay a nanny tax once the threshold is met, you and your nanny or household worker can be charged with tax fraud, fined, and audited.

Do I Need an EIN to Pay the Nanny Tax?

To pay for household payroll taxes, you’ll need to have an EIN (Employer Identification Number) issued by the IRS for any person who hires people in a personal or business setting.

The EIN is free. You can get it immediately if you file online. But you can also apply via email or fax.

Some nanny payroll services, such as Nanny Chex, can help set up your EIN.

Can I Pay My Nanny Through My Small Business?

Even if you have an EIN for your small business, you can’t use that for your household workers’ income taxes. Doing so can result in hefty fines.

The IRS requires you to get a separate EIN for household employment taxes.

Who Should Use Nanny Payroll Services?

You can take the DIY route for your nanny taxes, but you could make errors that might lead to hefty fines unless you’re an accountant.

Nanny payroll services might be for you if:

• You don’t know how to calculate nanny taxes using up-to-date laws and guidelines.
• You want to save time while also making accurate payroll processing tasks and tax calculations.
• You want hassle-free tax calculations and transactions.
• You want to avoid future IRS penalties from incorrect tax payments.

Using payroll software doesn’t require special skills. So, you can make correct calculations even if you’re not an accountant.

How to Pay Your Household Employees?

You can manually keep track of your workers’ hours, calculate their wages minus taxes or other deductions, and send their pay or write their check every pay period.

Then, you’ll also have to calculate reimbursements manually, if applicable.

But with nanny payroll services, all these can be automated for hassle-free calculations of your workers’ compensation so you can pay them accurately and on time.

Should I Use A Payroll Service For Nanny?

• It saves you time every pay period.
• Automated release of your employees’ wages so they can get paid on time.
• Calculates nanny tax even with updates/changes in state and federal tax laws
• Better record keeping because all your tax forms, payroll records, tax documents, and employer account information are in one place.
• Less paperwork, especially if you use the automated and comprehensive services.
• Better compliance with the IRS to avoid fines and penalties.

What are the Must-Have Features for Nanny Payroll Software?

• Ability to integrate with other systems
• Employee payroll system for hassle-free paydays
• Reporting tools
• Direct deposit feature
• Check printing
• Benefits management
• 401(k) tracking
• Vacation and leave tracking
• Tax preparation tools
• Secure online portal
• Expert customer service (for tax advice and to answer technical questions)
• Workers’ compensation policy administration
• Payment reminders
• Correspondence with state and federal agencies
• Automatic tax filing

What to Look For in a Nanny Payroll Provider?

• User-friendly nanny payroll software that’s easy to set up and use.
• Costs and flexibility of fees.
• Self-service or full-service options for tax filing.
• Mobile device option for doing your business on the go.
• Expert customer care, preferably with 24/7 service.
• Automated payment features, including direct deposit and check printing.
• Built-in tax services, including calculation, form preparation, and filing.
• Integrations with other services, such as banking, accounting, HR (human resources), and other third-party software.
• Comprehensive service options.

You can incur penalties and fines if you’re late in filing your employer taxes. So, your nanny payroll company should know the deadlines and process your tax accounts before the due dates.

How Do You Do Payroll For A Nanny Share?

The actual pay will depend on your earlier arrangement with your nanny, but each family typically pays around two-thirds of the nanny’s usual hourly rate for a regular nanny work.

So, of a nanny earns $20/hour working for a single family in your area, then you and the other family will pay around $13-14/hour each. Your nanny will earn a total of around $26-28/hour.

REFERENCES

(1) https://www.bls.gov/web/laus/laumstch.htm