A household employee refers to an individual who is employed to take care of children, to clean the house, to cook, and to provide other personal services. Examples include babysitters, nannies, and housekeepers are household employees. An independent contractor will not fall under the definition of a household employee. Individuals who hire household employees must pay and withhold social security and medicare taxes (FICA). In the case where a household employee is not employed by an agency, the individual who hires such employees must also pay federal unemployment taxes (FUTA). The taxes that are paid on household employees are commonly called as the nanny tax.