Tax and Legal Requirements for Hiring a Household Caregiver in Texas (2026): W-2, Payroll Taxes, I-9, and Overtime

Last reviewed for accuracy: May 8, 2026.

If you hire a private caregiver to work in your family member's home in the Dallas-Fort Worth area, you are usually a household employer in the eyes of the IRS and, potentially, the Texas Workforce Commission. This is true whether you found the caregiver through a friend's recommendation, an online job board, or your church's bulletin board. If you control when, where, and how the caregiver works, they are generally your employee - not an independent contractor.

Most Dallas families who hire private caregivers don't set out to break employment law. They simply don't know the rules. This guide covers the key legal and tax requirements for household employers in Texas in 2026.

Quick answer: If you hire a caregiver directly in Texas, you usually need to think in W-2 terms, not 1099 terms. The main issues are federal household-employer tax thresholds, Texas unemployment-tax liability, Form I-9, overtime rules, recordkeeping, and whether you want insurance protection in place before care begins.

This is one of the main reasons families who start with a private caregiver search eventually pivot back to a licensed agency. The care may still be less expensive on paper, but the employer burden is real.

W-2, Not 1099

The most common mistake is treating a caregiver as an independent contractor and issuing a 1099 instead of a W-2. The IRS uses a behavioral control test: if you dictate the caregiver's schedule, tasks, and methods, they are your employee. Caregivers who come to a client's home on a set schedule to perform assigned duties are employees under this standard.

Misclassifying an employee as a contractor can result in IRS penalties including back taxes, interest, and fines.

Payroll Taxes

As a household employer, you may need to withhold and pay the employee's share of Social Security and Medicare taxes, pay the employer's share of Social Security and Medicare taxes, pay Federal Unemployment Tax (FUTA), and file Schedule H with your personal federal tax return.

2026 Federal Household-Employer Thresholds