How to Document Cash Wages for a Household Employee

Cash pay is still pay

Paying a nanny, housekeeper or other household employee in physical cash does not remove the need to understand your employment obligations. Record the actual earnings and the actual payment. Do not label genuine wages as a gift, invent a deduction, or leave a payment out of the annual record merely because it did not pass through a bank transfer.

For household employment tax guidance, read IRS Publication 926. The payment method does not, on its own, decide whether the worker is your employee or answer every tax question. If the arrangement is unclear, get advice based on the work and employment relationship rather than choosing a document label first.

Keep the earnings calculation

Write down the employer and employee, the work dates, the pay date, the agreed rate and any hours used to work out the wages. Separate genuine earnings from deductions. The gross-pay amount explains what was earned before deductions, while the net-pay amount explains what the employee received. Keep the supporting time record so the totals can be checked later.

Keep evidence of the cash payment

A dated acknowledgment can help both sides confirm that the cash was received and which work period it covered. Keep it with the pay record rather than storing the amount only in a message thread. A PDF pay stub describes a payment; generating it does not establish that cash changed hands. Make sure the employee's copy and your retained copy describe the same transaction.

If the amount paid differs from what was agreed, resolve and explain the difference instead of changing the hours to conceal it. A correction should have a clear reason. Avoid creating another apparent payment record when you are simply replacing an inaccurate document. Keep enough version information to identify the final record without adding the same cash wages to your totals again.

Track the annual Social Security and Medicare threshold

When 2026 cash wages to a household employee reach $3,000, Social Security and Medicare apply under the household employee threshold rule, subject to applicable exceptions. The employee rates are 6.2% and 1.45%, and the employer pays the same rates. The Social Security wage base is $184,500. Use Publication 926 to understand the treatment rather than assuming cash wages sit outside the rules.

Maintain a running annual record for the employee. Do not reset the total when you switch payment methods, change templates or start using StubzPro. If your earlier records are incomplete, reconstruct them from reliable evidence before presenting a year-to-date amount as complete. Ask a tax professional how to address uncertain historical payments.

Check the separate FUTA test

FUTA applies if you pay $1,000 or more in cash wages to household employees in any calendar quarter. It is 6.0% of the first $7,000 per employee, minus a credit of up to 5.4% for state unemployment tax paid. This is a separate question from the annual Social Security and Medicare threshold. A record of payment dates helps you review it.

Prepare an honest, readable stub

Use the nanny pay stub template to review the fields before entering your own figures. Use actual wage and deduction amounts, then compare the preview with the cash payment record. The nanny tax calculator can support an estimate, but does not handle the cash, remit taxes or file employment forms for you.

Store the complete record

Keep employment tax records for at least 4 years. Store the earnings calculation, payment acknowledgment, final stub and any correction explanation together. Protect the employee's personal information and share it only as needed. A useful cash-pay record should let you explain the work, the amount earned and the payment without asking someone to trust an unsupported total.