Best Nanny Payroll Software 2026: No Setup Fee Options

The nanny tax: what household employers owe

Hiring a nanny, housekeeper, senior caregiver, or other household employee creates specific tax obligations that most household employers are not aware of until they face an audit or a nanny makes an unemployment claim.

The "nanny tax" refers to the combination of: withholding Social Security (6.2%) and Medicare (1.45%) from the employee's wages; paying the employer's matching portion (7.65%); registering with the state for unemployment insurance (SUI); and filing Schedule H with your personal tax return to reconcile the household payroll taxes. The trigger threshold is $2,700 paid to a single household employee in 2026, above that, all of these obligations apply.

Nanny payroll software handles this complexity automatically, calculating withholding, generating quarterly tax deposits, and producing the year-end W-2 and Schedule H. The alternative is navigating IRS Publication 926 and state-specific requirements manually, which most household employers find prohibitively complex.

Best nanny payroll tools compared

SurePayroll's Household plan is priced at $39/month for one employee (your nanny), confirmed May 2026. This includes federal and state tax filing, free 2-day direct deposit, unlimited payroll runs, W-2 and Schedule H generation, and mobile payroll runs. New users currently receive 6 months free. HomePay (Care.com) pricing is not publicly listed on their website as of May 2026. Based on third-party research, HomePay charges $75/month (quarterly billing) plus a $100 year-end fee for W-2 and Schedule H preparation. Contact HomePay directly to confirm current rates. GTM Payroll does not publish pricing and requires a direct consultation.

SurePayroll: best full-service nanny payroll software

SurePayroll has a dedicated household payroll product designed specifically for nanny and caregiver employers. It handles federal and state tax filings, W-2 generation, Schedule H preparation, and direct deposit or check payment. The nanny receives a pay stub via the SurePayroll employee portal.

SurePayroll's Household plan costs $39/month for one employee and is specifically designed for families with nannies, housekeepers, and other household workers. The plan includes federal and state tax calculation and filing, free 2-day direct deposit, W-2 generation at year-end, and Schedule H preparation (the IRS form for household employers). New customers receive 6 months free as of May 2026. Trustpilot reviewers who use SurePayroll for nanny payroll frequently highlight the automatic state and federal form handling, one user wrote: "My only regret is not finding it sooner." The self-service model means you initiate each payroll run (typically takes under 5 minutes once set up).

Ideal for household employers who want a purpose-built nanny payroll solution that handles all tax filing automatically, at lower cost than a full-service managed payroll firm.

HomePay: best for hands-off service

HomePay (owned by Care.com) is a fully managed nanny payroll service, you provide the hours, HomePay handles all tax deposits, filings, and year-end documents. Many household employers prefer this model because nanny payroll tax complexity is significant and the consequences of errors (back taxes, penalties) are real.

HomePay has no setup fee. Based on third-party research, HomePay charges $75/month (billed quarterly at $225) plus a $100 year-end fee for W-2 and Schedule H preparation, making the effective annual cost approximately $1,000. There is no one-time setup or enrollment fee to get started. Contact HomePay directly to confirm current rates, as pricing can change and their public pricing page has been inconsistently available.

Ideal for household employers who want zero involvement in tax administration and are willing to pay a premium for complete management.

Frequently asked questions

Does HomePay have a setup fee? No. HomePay (Care.com) does not charge a setup or enrollment fee. The cost is $75/month (billed quarterly) plus a $100 year-end fee for W-2 and Schedule H filing. SurePayroll and Poppins also have no setup fee for their household payroll plans. GTM Payroll requires a consultation to confirm their fee structure.

Which nanny payroll services have no setup fee? SurePayroll ($39/mo), Poppins ($49/mo flat), HomePay ($75/mo), and Gusto ($49 base + $6/person) all have no setup fee as of 2026. The main cost difference is monthly pricing and whether Schedule H is included. Poppins and HomePay include Schedule H preparation; Gusto does not.

Can I pay my nanny as a 1099 contractor to avoid the nanny tax? No. The IRS is explicit that household employees cannot legally be classified as 1099 contractors if you control how, when, and where they work. Attempting to 1099 a household employee can result in back taxes, interest, and penalties.

What happens if I do not pay the nanny tax? The primary risk surfaces when the employee files for unemployment benefits or Social Security; they will have no record of earnings, which triggers a misclassification report to authorities. The IRS can assess back FICA taxes plus a 100% penalty under the Trust Fund Recovery Penalty.

What is the cheapest nanny payroll service with no setup fee? SurePayroll Household at $39/month is the lowest-priced full-service option with no setup fee, including federal and state tax filing and W-2 generation. Gusto Simple starts at $49 base + $6/person ($55 total for one nanny) but does not handle Schedule H automatically.

Poppins and Gusto: other household payroll options

Beyond the two specialists most families compare first, two more services handle nanny and household payroll well. Poppins Payroll runs a flat $49/month with no per-employee surcharge, no setup fee, and a 30-day free trial. It registers you with state agencies, files Schedule H prep documents, handles new-hire reporting, and processes direct deposit. Poppins operates in nearly every state but skips a handful, so confirm coverage for your state before signing up. Families who want a low, predictable bill and a clean interface tend to land here.

Gusto is built for small-business W-2 and 1099 payroll, but plenty of households use it for a nanny because the Simple plan starts at $49/month base plus $6 per person. For a single nanny that's $55/month, slightly above Poppins, but you get automatic multi-state tax filing, unlimited pay runs, and an employee app where your nanny views pay stubs and W-2s directly. Gusto carries a 4.5/5 on G2 across thousands of reviews. The catch: Gusto does not file Schedule H for you, and it won't remind you about the quarterly estimated-tax payments household employers owe. You handle that side yourself or with a CPA.

How to choose between them: pick Poppins if you want the cheapest fully-managed household service and your state is supported. Pick Gusto if you also run a side business, employ other 1099 contractors, or want a polished self-service portal and don't mind handling Schedule H separately. Families juggling a nanny plus a part-time house manager benefit from Gusto's per-person pricing scaling cleanly, while a single-nanny household paying every two weeks usually saves money and mental overhead with a flat-fee specialist.

Schedule H, the $2,700 Threshold, and Quarterly Estimated Taxes

The federal trigger for household employment taxes in 2024 is $2,700 in cash wages paid to any one household employee during the year (the figure indexes upward most years, so check the current IRS number). Cross that line and you owe Social Security and Medicare (FICA) taxes - 7.65% withheld from your nanny plus a matching 7.65% you pay as the employer, 15.3% combined. Separately, if you pay $1,000 or more in any calendar quarter, you owe federal unemployment tax (FUTA) on the first $7,000 of wages. These thresholds are per-employee, so two part-time sitters are each measured on their own.

Schedule H is the form that reconciles all of this. You don't file a separate quarterly employment return the way a business does - instead you report the full year's household employment taxes on Schedule H and attach it to your personal Form 1040 at tax time. That single annual filing is what makes nanny payroll different from standard business payroll, and it's the step Poppins and the dedicated services automate while general tools like Gusto leave to you.

Because the taxes ride on your personal return, the IRS expects you to pre-fund them through quarterly estimated tax payments using Form 1040-ES. Skip them and you can owe an underpayment penalty even if you pay the full balance in April. The 2024 due dates are April 15, June 17, September 16, and January 15, 2025. A practical approach: total your expected annual FICA and FUTA, divide by four, and add that to whatever estimated income tax you already send in. Increasing your own W-2 withholding at a separate job is an alternative that sidesteps the quarterly schedule entirely. A payroll service that calculates the per-quarter figure for you removes the most common source of household-employer penalties.

Workers' Comp, Domestic-Employer Insurance, and Pricing

Payroll taxes aren't the only obligation. Many states require workers' compensation insurance for household employees, and the rules vary sharply. California, New York, New Jersey, and Illinois mandate coverage for a nanny working set hours; states like Texas leave it optional. If your nanny is hurt on the job and you carry no policy in a mandatory state, you can face fines plus direct liability for medical bills and lost wages. Some homeowners policies add a domestic-worker workers' comp endorsement for a modest premium, which is often the cheapest route for a single employee.

Beyond comp, consider an employment practices angle: household employers have been sued over wrongful termination and wage disputes. A standard homeowners or umbrella policy may extend some coverage, but read the domestic-employee clause before assuming. The payroll services help indirectly - accurate records of hours, overtime, and pay are your first defense in any wage claim, which is one more reason to run a real payroll instead of paying cash.

Here's how the main household payroll options compare on price and what they cover:

The pricing gap between a $49 flat specialist and the $80 HomePay tier buys you concierge-level handholding - dedicated phone support, audit assistance, and a household-specialist team. For a first-time employer nervous about Schedule H and state registration, that premium often pays for itself in one avoided penalty. A budget-focused family comfortable with a clean self-service tool, and willing to handle Schedule H or hand it to a CPA, will spend less with Poppins or Gusto. Either way, factor workers' comp into your real cost: in a mandatory state, a small endorsement on your homeowners policy frequently runs less than $300 a year and closes the largest uninsured gap most household employers overlook.