Nanny Contracts and the Nanny Tax: A Plain-English Guide for US Families

A handshake is not a hiring strategy. A proper written contract protects both your family and your nanny — and paying legally on payroll is not optional. Here is what matters, in plain English.

What every nanny contract should include

• Guaranteed weekly hours and exact schedule
• Hourly rate, overtime rate (1.5x after 40 hours in most states)
• Paid vacation, sick days and holidays
• Duties and what is explicitly not expected
• Confidentiality clause (NDA) — essential in private households
• Notice period and severance terms

The nanny tax — simply explained

If you pay a household employee more than the annual IRS threshold, you must withhold Social Security and Medicare, pay federal unemployment tax, and issue a W-2 — not a 1099. Misclassifying your nanny as a contractor is one of the most expensive mistakes families make: back taxes, penalties and interest add up fast.

The good news

Household payroll services handle everything for roughly $50–$100 per month, and employer-side costs typically add only 10–12 % on top of the salary. Paying legally also lets your nanny build credit and benefits — which attracts far better candidates.

Every Elite Swiss placement includes contract guidance, and we connect you with trusted household payroll specialists. Discreet, compliant, done right from day one.