What is the correct way to pay my nanny?
If you've decided to hire a nanny to help you take care of your little ones, it's important to remember that you're now an employer. That means you have certain responsibilities, including paying your nanny legally. You might be able to pay your occasional date night babysitter in cash, but not your nanny! As experts in the industry, we're here to help you navigate the process.
Here are some tips to make sure you're legally paying your nanny:
Determine your nanny's employment status: Is your nanny an employee or an independent contractor? According to the IRS, nannies are considered household employees. There may be a few exceptions, some Newborn Care Specialists who are only with a family for a short period of time work as independent contractors. Read more from the IRS here.
Get an Employer Identification Number (EIN): You'll need this unique number to identify your business (even if it's just you and your nanny) for tax purposes. You can get an EIN online through the IRS.
Withhold taxes: As an employer, you're responsible for withholding federal and state taxes from your nanny's paycheck. Ask your nanny to fill out a W-4 form so you know how much to withhold.
Pay Social Security and Medicare taxes: You'll also need to pay Social Security and Medicare taxes on behalf of your nanny. This is an important expense to be aware of when hiring a nanny!
Keep accurate records: Keep track of your nanny's hours, wages, and taxes withheld. This will help you when it comes time to file your taxes.
Pay hourly: According to the Fair Labor Standards Act, Nannies are legally required to be paid hourly and cannot be salaried. Be aware of the minimum wage and overtime laws in your state.
Pay on time: Make sure you pay your nanny on time and in full. Agree on a regular pay schedule with your nanny and stick to it.
Consider using a payroll service: If all of this sounds like too much to handle, consider using a payroll service. They can handle all of the tax withholding and payment requirements, as well as provide you with necessary tax forms. We recommend using GTM Payroll and HR.
Paying your nanny legally protects both you and your nanny. Plus, it ensures that you're treating your nanny with the respect and fairness they deserve!
Have more questions about hiring a nanny? Ready to start your nanny search?
