The au pair program sits at the intersection of immigration law, labor regulation, and federal tax — and most of the people involved in it get at least one of those three wrong.

Host families assume the au pair is "like a family member" and skip the tax paperwork. Au pairs assume their stipend is not real income. Sponsoring agencies focus on the cultural exchange piece and gloss over the IRS requirements. The result is a predictable mess: missed filings, unexpected tax bills, and in some cases, immigration consequences.

This article covers what the IRS actually requires of au pairs and host families, how the Department of State's J-1 program rules interact with those tax obligations, and where the most common mistakes happen.

An au pair is a foreign national — typically between 18 and 26 years old — who enters the United States on a J-1 Exchange Visitor visa under the Department of State's Au Pair Program. The program is administered through designated sponsor organizations (DSOs) approved by the State Department's Bureau of Educational and Cultural Affairs (ECA).

The J-1 au pair is not an immigrant. They are not a tourist. They are an exchange visitor — a legal status that carries specific tax treatment under the Internal Revenue Code and specific program requirements under 22 C.F.R. Part 62.

That distinction matters enormously for tax purposes.

Before getting to the IRS, it helps to understand the State Department framework, because it shapes the tax analysis.

Au pairs must enter through a State Department-designated sponsor. As of 2026, there are roughly a dozen approved sponsors, including Cultural Care Au Pair, Au Pair in America (APIA), InterExchange, and GoAuPair. The sponsor is responsible for screening, placing, and monitoring the au pair throughout the program year.

The State Department sets a minimum weekly stipend for au pairs, which is tied to the federal minimum wage. As of 2026, the minimum is calculated as 40 hours per week at 40% below the federal minimum wage — currently $195.75 per week for standard au pairs and $250.00 per week for EduCare au pairs (who work fewer hours but are enrolled in more coursework).

Host families cannot pay less than this floor. Many pay more. The stipend is not optional, and it is not a gift — it is compensation for services rendered.

Au pairs are limited to 45 hours of childcare per week and no more than 10 hours per day. EduCare au pairs are capped at 30 hours per week. These limits are program requirements, not suggestions. Violations can result in the au pair's J-1 status being revoked.

All au pairs must complete a minimum of 6 semester hours (or equivalent) of academic coursework at an accredited post-secondary institution during their program year. Host families are required to pay up to $500 toward this education requirement. EduCare au pairs must complete 12 semester hours, with host families covering up to $1,000.

Here is where most people get into trouble.

The IRS treats au pairs as household employees. They provide services in the home, under the direction of the host family, using the host family's equipment and supplies. That is the definition of an employee under common law.

This means the host family is the employer. The au pair is the employee. The tax obligations that flow from that relationship are real and enforceable.

Au pairs on J-1 visas are exempt individuals for purposes of the substantial presence test during their first two calendar years in the United States. This means they do not count days of presence toward the 183-day threshold that would otherwise make them resident aliens.

As a result, most au pairs are nonresident aliens (NRAs) for U.S. tax purposes — at least during their first two years. This has significant consequences:

• They are taxed only on U.S.-source income, not worldwide income
• They must file Form 1040-NR (not the standard Form 1040)
• They are subject to a flat 30% withholding rate on certain types of income, unless a tax treaty reduces that rate
• They are not eligible for the standard deduction (they may only claim the personal exemption)
• They cannot file jointly with a spouse

After two full calendar years, an au pair who remains in the U.S. may become a resident alien under the substantial presence test and would then file Form 1040 like any other resident.

This is the question that generates the most confusion: Are au pair stipends subject to Social Security and Medicare taxes (FICA)?

The answer is no — but only because of a specific statutory exemption, not because the stipend is not income.

Under IRC § 3121(b)(19), compensation paid to a nonresident alien temporarily in the United States on a J-1 visa as part of a bona fide educational or cultural exchange program is exempt from FICA. This exemption applies as long as the au pair maintains valid J-1 status and is participating in the authorized program.

What this means in practice:

• Host families do not withhold Social Security or Medicare taxes from the au pair's stipend
• Host families do not pay the employer's share of FICA on the stipend
• The au pair does not earn Social Security credits during the program

This is a genuine exemption — not a gray area. But it applies only to the J-1 au pair stipend. If the au pair earns other U.S.-source income (babysitting for a neighbor, tutoring, etc.), that income may be subject to different rules.

Even though FICA does not apply, federal income tax withholding does.

The au pair's stipend is wages subject to federal income tax. Host families are required to withhold federal income tax from each stipend payment unless the au pair claims exemption from withholding on Form W-4.

A nonresident alien au pair cannot claim exempt from withholding on Form W-4 unless they are a resident of Canada, Mexico, or South Korea (due to treaty provisions), or meet other narrow exemption criteria. Most au pairs from Europe, Latin America, or Asia will have federal income tax withheld.

The withholding rate for nonresident aliens on wages is calculated using the NRA withholding tables in IRS Publication 15-T, which apply a flat add-on to the standard withholding calculation.

State income tax obligations depend on the state where the host family lives. Most states that have an income tax will tax the au pair's stipend as wages earned in that state. The au pair will generally need to file a state nonresident or part-year resident return.

Arizona, for example, taxes wages earned within the state regardless of the worker's residency status. An au pair placed with a Tucson or Chandler host family will owe Arizona income tax on their stipend.

Host families are subject to the household employer tax rules — commonly called the "nanny tax" — under Schedule H of Form 1040.

A host family must file Schedule H if they pay a household employee $2,700 or more in cash wages during the calendar year (2026 threshold; this amount adjusts annually). Given that the minimum au pair stipend is roughly $10,000 per year, Schedule H is almost always required.

Schedule H requires the host family to report:

• Federal income tax withheld from the au pair's wages
• The employer's share of FICA — but only if FICA applies

Because the J-1 au pair stipend is FICA-exempt under IRC § 3121(b)(19), the host family does not owe the employer's share of Social Security and Medicare. However, they must still report the wages and any federal income tax withheld.

Host families must issue a Form W-2 to the au pair by January 31 of the following year, reporting the total stipend paid and any federal (and state) income tax withheld. The au pair uses this W-2 to file their Form 1040-NR.

Failure to issue a W-2 does not eliminate the au pair's filing obligation — it just makes compliance harder and increases the risk of IRS notices.

The host family's required contribution toward the au pair's education (up to $500 for standard au pairs, up to $1,000 for EduCare) is generally not taxable income to the au pair if it qualifies as a working condition fringe benefit or is paid directly to the educational institution. If paid as cash reimbursement, the tax treatment becomes more complicated and should be reviewed carefully.

Most au pairs must file Form 1040-NR — the U.S. Nonresident Alien Income Tax Return — for each year they receive U.S.-source income. The filing deadline is April 15 for au pairs who had wages subject to withholding, or June 15 if no withholding occurred.

In addition to Form 1040-NR, au pairs must file Form 8843 — the Statement for Exempt Individuals and Individuals with a Medical Condition. This form documents the au pair's J-1 status and their claim to the substantial presence test exemption. It must be filed even if the au pair has no taxable income.

Form 8843 is due by the same deadline as the income tax return. If the au pair has no income and no filing requirement, Form 8843 is still required as a standalone filing.

The United States has income tax treaties with many countries that may reduce or eliminate U.S. tax on the au pair's stipend. Common au pair source countries with relevant treaty provisions include Germany, France, Australia, and Brazil. The treaty benefit must be claimed on Form 1040-NR and, in some cases, on Form 8233 (for withholding exemption purposes).

Au pairs should not assume a treaty applies — they need to review the specific treaty article and confirm eligibility with a tax professional.

Host family treats the stipend as a gift. The stipend is wages. It is not a gift, a scholarship, or a room-and-board arrangement. Treating it as a gift to avoid tax paperwork is incorrect and creates exposure for both the host family and the au pair.

Host family withholds FICA. Because the J-1 exemption is not widely understood, some host families (or their payroll providers) incorrectly withhold Social Security and Medicare taxes. The au pair is then entitled to a refund of the over-withheld FICA, which requires filing Form 843 and can take months to resolve.

Au pair files Form 1040 instead of 1040-NR. This is a common error, especially when the au pair uses consumer tax software that defaults to the resident alien return. Filing the wrong form can result in incorrect tax calculations and IRS correspondence.

Au pair fails to file Form 8843. This form is required regardless of income level. Failure to file can affect the au pair's immigration record and their ability to claim the substantial presence test exemption in future years.

Host family fails to issue a W-2. Without a W-2, the au pair cannot accurately complete their 1040-NR. The host family is also subject to penalties for failure to furnish a payee statement.

Assuming the sponsor handles the taxes. Sponsoring organizations handle program compliance — visa paperwork, matching, monitoring. They do not prepare tax returns, and their guidance on tax matters is often general and sometimes incorrect. Both the host family and the au pair need independent tax advice.

The State Department's ECA conducts periodic audits of sponsor organizations and, through them, of host family compliance with program requirements. Violations of the work hour limits, stipend minimums, or education requirements can result in the au pair's J-1 status being terminated — which creates immediate immigration consequences and can complicate the tax picture significantly.

If an au pair's J-1 status is revoked mid-year, their tax residency status for that year may need to be recalculated, and any income earned after the revocation date may be treated differently than income earned while in valid J-1 status.

The au pair program is a genuine cultural exchange opportunity — but it operates within a real legal and tax framework that both host families and au pairs need to take seriously.

Host families have employer obligations: withhold federal income tax, issue a W-2, and file Schedule H. They do not owe FICA on the J-1 stipend, but they need to document that exemption correctly.

Au pairs have filing obligations: Form 1040-NR for income, Form 8843 regardless of income, and potentially state returns depending on where they are placed. They should review applicable tax treaties and not rely on consumer tax software designed for resident aliens.

If you are a host family navigating these requirements — or an au pair trying to understand your U.S. tax obligations — the rules are manageable with the right guidance. The mistakes are also manageable, but only if you catch them before the IRS does.