Updated: Jul 20
If you type in a Google search for the best nanny payroll and tax service, you'll come across a plethora of articles comparing the same few companies. You'll get a high level overview of what's included and a general price range, but we think we can go a bit deeper.
Since we're in the nanny tax business ourselves, we make it a point to understand exactly what's out there and how much families are being charged for nanny tax services. With this comparison, we aim to do these 3 things:
Give you our top nanny payroll & tax picks for different budget levels
Compare and contrast specific features of each plan
Help you understand exactly what you're paying for
Ready to get started?
1. Best Nanny Payroll and Tax Service for Your Budget
Before we get into the nitty gritty details, we thought we'd lay out our top 3 nanny tax services depending on price.
We've done a ton of research on the features, service level, and cost of all the popular (and newer) nanny tax companies out there, so we'll identify our favorites and then get into why.
Best full service, high budget service: Care.com's HomePay ($$$)
Best mid-tier service: SurePayroll ($$)
Best guided DIY, affordable service: Nanny Files ($)
I agree, for our DIY pick we're a bit biased, but read on to find out how we compare to the other options when looking at price per feature.
2. Features of our Top Nanny Tax and Payroll Service Picks in 2023
First, let's take a brief moment to understand why you would choose one service over the other. I assume that you have a basic understanding of nanny tax requirements if you're doing this research, but if you'd like a refresher, check out our detailed post for everything you need to know about nanny taxes.
Why Would You Choose HomePay For Your Nanny Tax Service ($$$):
HomePay is a reputable, quality company that provides full service support for nanny payroll and tax filings. If you have the budget for it and you want a completely hands-off experience with nanny taxes, this is the service for you. They have a few direct competitors that are similarly priced, but if I were choosing a full-service, higher cost company to work with, it would be HomePay. They are reviewed well and have a fresh, user-friendly interface.
Why Would You Choose SurePayroll For Your Nanny Tax Service ($$):
SurePayroll works out to be around half the cost of HomePay, though you lose quite a bit of support. Use SurePayroll if you want help with quarterly and annual tax filings, but don't want to completely outsource your nanny taxes. You still have to set up your federal and state tax accounts and pay an additional fee for year-end tax preparation. SurePayroll is a division of Paychex, which is a reputable business payroll tax service and should provide accurate tax calculations. Update for 2023: We still recommend this mid-priced service, but we've heard from our members to look out for unexpected up-charges for things like W-2s and other reports.
Why Would You Choose Nanny Files For Your Nanny Tax Service ($):
Nanny Files is a budget-friendly alternative to the above services and aims to help families track payroll, calculate taxes, and guide them in filing their taxes. This service is for families that don't mind popping onto the computer once each quarter to pay nanny taxes, and, as a result, save quite a bit of money.
Here is a super detailed view of all of the features included in these 3 plans. If your browser compresses the file, make sure to scroll to the right to see the entire table.
3. What Value Are You Getting From The Nanny Tax Services?
Whenever I'm evaluating a product purchase, I think hard about what I'm getting for my money. In essence, I want to feel like I'm getting a great value for the price I'm paying.
An exercise that was helpful for me when I first started shopping around for nanny tax services (prior to founding Nanny Files) was to really think about how much I'd be paying for actual time saved.
As an extremely time-strapped working parent, I value my time highly. But if I think I can do something quickly that otherwise would cost an exorbitant amount, I consider whether that thing is worth doing instead of paying for.
In the case of nanny taxes, there are quite a few features that our top 3 picks all offer: accurate tax calculations, a professional payroll portal, wage tracking, and paystub creation. If we split out all the other costs of the services and just assign a price to those common features, let's say that equals $250 each year, or approximately $20 per month.
Then we can take a look at the actual time savings that we get for hiring a nanny tax service to take care of our filings and tax payments. Let's look at each of our top 3 picks to see what I mean:
Care.com HomePay - In our feature comparison above, we find that HomePay saves users, on average, 3 hours each year on tax account setup and tax filings and payment. Subtract our base of $250 for essential features from the $1,000 annual fee and you're paying $750 for your 3 hours of time saved. If you divide that by 3, you can see that you're paying $250 per hour of time saved. Now you can make a value-based decision as to whether it's worth it to you.
SurePayroll - This company charges $648.88 per year for its services and will save you, on average, 2.33 hours of your time. Following the same logic as above, you'll pay $398.88 to save 2.33 hours, which works out to $171 per hour.
Nanny Files - Nanny Files does not claim to take the tax filing off your plate; we just offer the same professional tools that our other top picks provide, and we add in visual, step-by-step guides to walk you through the process. If you apply the same logic, there is an additional $25 fee you pay for the detailed guides and videos, which we hope will save you at least an hour in Googling requirements and stumbling through applications.
We're happy to see that there are more and more options for families that want to legally pay their nannies. Whether you want to get nanny taxes completely off your plate or you're considering a DIY route, there are plenty of resources for you to make the right choice.
Think about what you're willing to pay - from a monetary or time perspective - and one of our top picks will help you stay compliant and, hopefully, sane.