Although many workers have a private household as their workplace, many household employers are unaware of or fail to meet their state and federal payroll tax obligations, thus undermining the workers’ retirement income security. This dissertation uses sixty interviews with household employers and employees in the Washington, DC, area to investigate the causes and conditions of nanny tax evasion. Ethnographic fieldwork and semi-structured interviews indicate that lack of awareness, tax complexity, social norms of noncompliance, and poor personal ethics diminish payroll tax payment; concern over one’s job, personal ethics and altruistic concern for the employee motivate compliance. An analysis of limited IRS data on audits as well as data on Schedule H household employment payroll tax returns reveal that although some unpaid tax was discovered, almost as much tax paid in error was refunded, confirming the importance of complexity as a determinant of compliance. Analysis of results using Kohlberg’s stages of moral development and force field analysis of motives provides insight into employers’ decisions to pay or evade their nanny taxes. Policy recommendations emphasize increasing public awareness, tax simplification, and enforcement.