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HomeWork Solutions Inc. is the leading authority on household payroll and taxes - the  "Nanny Taxes." Since 1993 HWS has assisted tens of thousands of household employers with their payroll and tax compliance for their nanny, housekeeper, senior caregivers and other household employees.

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Kathleen Webb Household Payroll Authority

Kathleen Webb, the President and co-founder of HomeWork Solutions Inc. has worked with nanny employers to simplify Nanny Payroll and Nanny Tax Compliance since 1993.

Ms. Webb periodically updates household employers and nannies alike on issues related to household employment.

View Kathleen (Kathy) Webb (kathy@4nannytaxes.com)'s profile on LinkedIn

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HomeWork Solutions: The Household Employee Experts

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How Do I Pay Nanny Taxes for my Housekeeper?

 

housekeeper nanny taxesAt Thanksgiving last year, The Crawford Family got together as so many families do on this day to share a traditional meal, spend time together and talk about where they are and where they want to go.

Michelle mentioned how challenging she was finding the balancing act of kids, a home and full time work. Michelle had just gone back to work full time when her youngest started school that September. Her sister suggested hiring a housekeeper to keep the home tidy and organized. 'More quality time with my family, not with my washing machine, good plan' Michelle thought.

In March, Michelle had a meeting with her accountant about her taxes. In casual conversation, Michelle mentioned how great it was to have someone come in to help around the house twice a week. Her accountant knew Michelle had become an employer but didn’t know it, and she sent her to HWS.

Who knew that hiring a housekeeper to make my life easier added the worries of payroll taxes and workers' compensation insurance to my plate?

So Michelle called HWS and I answered her call. She told me her story and I replied "That’s where we come in and make this easy for you. Do you have a minute to discuss the options?"

We agreed that Michelle would keep issuing the housekeeper a check every Thursday and HWS will pick up the tax reporting work and even prepare documents for the accountant to keep things simple at year end.

HWS helped her to understand how household payroll taxes impact her budget.

HWS calculated the payroll taxes the housekeeper pays, and the taxes Michelle pays.

HWS helped Michelle obtain workers' compensation insurance. Many household employers do not realize the risks of going uninsured . "I had just assumed our homeowners covered this" Michelle state. "They don't! " I replied.

Michelle I had to do some catch up for last year - HWS held her hand all the way, and that was cleared up quickly. 

Now she creates a paycheck each week. At the end of each quarter, she goes online to report her payroll - it takes 2 minutes! So fast!

Going back to full time work was a big step for Michelle. Michelle was on the right track hiring the housekeeper, and now with HWS she has the worry free arrangement she was looking for.

"Coming home to a shiny kitchen and laundry that is cleaned, folded and put away is priceless to me," Michelle shared. As a mom to three boys, I can totally relate!

Mary Crowe FPC, Client Care ManagerDo you want your nanny or housekeeper to take responsibilities off your shoulder, not add new ones to it? If so call me. I am love showing new clients how HWS can make their lives simpler.

5 Attitudes Every Nanny Should Bring to the Workplace

 

5 Best Nanny attitudesThe keys to a nanny's success in the workplace all revolve around attitude. The "secret sauce" all successful professional nannies bring to their workplace includes the following attitudes:

"Yes I Can!" 
The default response to any reasonable (and legal :-) ) request by your family should be a cheerful yes. A "yes" buys you time, enables you to consider other options, and builds a positive relationship with your employer. "Yes I can" is the furthest response away from a "That's not my job" response, even if the request isn't your job. On a windy day when your employer asks you to pull in the empty trash cans from the curb, or when your mom boss asks you to take care of the towels in the dryer on her way out to work, "yes" is the best attitude.

"Always say "yes" to the present moment. What could be more futile, more insane, than to create inner resistance to what already is what could be more insane than to oppose life itself, which is now and always now? Surrender to what is. Say "yes" to life — and see how life suddenly starts working for you rather than against you." Eckhart Tolle

Servant

No, Downtown Abbey is not what is expected; however, an attitude of helpfulness and nurturing is a reasonable expectation.  A nanny is there to assist the family and make their life easier. Cheerful service is an attitude highly valued in a nanny. 

Nurturer

A nanny with a nurturing attitude supports and encourages the children and the family as a whole. Ideally you play an important supportative role in the family, helping them to raise their children.

Teacher

The best nannies teach, not simply do. A nanny can teach the children to clean up after themselves, to dress themselves, to prepare simple meals, to communicate respectfully and in short teach the children the skills needed to be successful adults.

Patience

A patient attitude is a necessary attribute of all good child carers. Children are constantly learning, and they may not acquire a skill on their first try. Helping a child to learn appropriate social skills requires patience. Children will learn how to push a caregivers buttons, and responding with patience and guidance will help the child learn healthy boundaries.

Tips: Be An ALL STAR NANNY

Long Term Care Insurance Can Help Pay for In-Home Senior Care

 

Long Term Care Insurance Helping Families Pay for Senior CareThe growing national movement towards aging in place is challenging many families. As noted recently in the New York Times, "Aging in community is important for preserving the quality of life for older adults and providing stability to neighborhoods." 

If your loved ones are healthy enough to remain in their homes but need assistance with Activities of Daily Living (ADLs) such as dressing, toileting and transfers or Instrumental Activities of Daily Living (IADLs) which are tasks that enable a person to live independently at home, such as meal preparation, driving, or light housework, how do you pay for the senior caregiver to support your Mom or Dad?

Many families are surprised to learn that their parents’ Long-Term Care Insurance may actually help pay for these non-medical homecare services. According to The American Association For Long-Term Care Insurance approximately 8.1 Million individuals were covered by a long-term care insurance policy in 2012 and of all claims paid 51% of them were paid for in-home care services.  

Understanding long-term care insurance and how it works can be critical to managing the care of your parents.

Where to start?

The first step is to determine what type of long-term care policy it is, the benefits paid under that policy, the elimination period on the policy and what the benefits and cap to the policy are.  While you should be able to obtain a copy of the policy, figuring this information out generally just requires a phone call to the insurance company who in most cases has an individual who can walk you through the policy.

Types of Long Term Care Insurance

There are two basic different types of Long Term Care Insurance, Tax qualified (TQ) policies and Non-Tax Qualified (NTQ) policies or sometimes called "traditional" long-term care insurance policies.  TQ policies require that a person not be able to perform 2 of 6 ADLs (dressing, eating, bathing, toileting, transferring, continence) or have a severe cognitive disorder, such as dementia that requires care for more than 90 days.  In either case a physician must make the determination and you will need to have the physician submit this determination to the insurance company that holds the policy.  Most importantly the benefits paid to a recipient of a TQ policy are exempt from taxable income.

A NTQ policy does not have to adhere to the rigid guidelines of meeting two ADLS or a severe cognitive disorder. Instead, a NTQ policy usually only requires that one ADL be met and extends the ADL provisions to activities such as walking.  While the policy tends to payout for less severe causes of care the IRS and U.S. Treasury Department has not made an official ruling or determination on the tax status of benefits received through NTQs.  This is important because it could mean that there is a hefty tax bill associated with the payout on these types of policies.  This is why it is important to understand whether the policy is a TQ policy or a NTQ policy.  In any case it is suggested that you consult a tax professional to determine whether the benefits for care for your parents’ policy may trigger a substantial tax bill.  Even if it doesn’t, reporting the 1099LTC you will receive from the long-term insurance company correctly can be tricky.

Most Long-term care policies are reimbursement policies, which means you pay out-of-pocket for the care and submit claims to the insurance provider; however, increasing in popularity over the past few years are cash policies.  Cash policies pay a cash benefit to the policy holder and from that cash benefit the policy holder can pay for care.  These policies are typically more expensive than a cash reimbursement policy, but they offer unique flexibility and ease to pay for care.  Often with reimbursement policies it can take time to be reimbursed and it can make paying caregivers and putting money on the table for them harder as you are forced to pay out-of-pocket and submit a receipt for the care. 

If paying for the care out-pocket is a concern there are companies such as FHS who you can assign the benefits of the policy to and they will pay for the care on your behalf for a small fee.  They can even assist you in determining what the benefits of the policy are and can ensure you get the full benefit from the policy.

Details Matter

Once you have determined what type of policy you have it is critical to understand what benefit the policy pays out.  Generally a policy will payout up to a certain amount monthly for a specific type of care and up to a total amount for that given care type over the course of the entire policy.  For example if a policy pays out $2,000 a month for in home care up to $240,000 the care recipient has 20 years of in-home care service at $2,000 a month.  If the cost of care is $2,200 you may be out $200 a month, but if the cost of care is $1,800 the policy will generally let you keep that additional $200 and put it in a pool for additional services in the future, including but not limited to in-home care.

Privately Hired Senior Caregivers

If you are privately hiring a caregiver it is important that you take into consideration not only the caregiver’s salary, but employer taxes as well.  These are generally about 10% of the caregiver’s gross wage, depending on the state you live in.  See our tax calculator for more specifics.  

Long-term care insurance is often the answer to how families pay for care; however, it is critical you understand the specifics of your policy and the cost of care.

 

FAMILY GUIDE TO SENIOR CARE ALTERNATIVES

Holiday Tipping: Ideas for Employers of Nannies and Caregivers

 

"Excellence is not a skill, it is an attitude." ~ Ralph Marston 

There is a long tradition of expressing appreciation to service workers through holiday or year end tipping and gift giving. Nannies, babysitters and other caregivers provide invaluable service to the families that employ them, and a holiday or year end bonus is very common.

Families often struggle with how much to budget for end of year expressions of appreciation, and how to express their gratitude.

Families should consider their own means and budget, as well as the relationship and quality of care when determining how much to give. The general rule is one week's pay - however HWS processes year end bonus payments that range from several hundred dollars to several thousands. There are many variables.

nanny holiday bonusDo you give cash, a gift or something else?

Cash is King! Your nanny or senior caregiver has added expenses in their household related to the holidays, and a bit of extra cash is always appreciated. This is the preferred holiday year end bonus.

Cash Alternatives...

Many families prefer to express their appreciation in a more personalized way. A gift can be appropriate, however great care should be taken to select a gift that is aligned with the nanny's lifestyle, values and interests. A carefully selected gift should speak to the recipient.

Some families will choose to make a contribution to the caregiver's retirement account. An employer contribution to an employee's retirement savings is common in the workplace, and a INA Annual Conferencegenerous contribution to the nanny's IRA demonstrates your care for the employee's long term financial stability.

A gift that benefits both the employer and the nanny is a financial commitment of paid professional development days and reimbursement for continuing education. There are educational conferences hosted by the International Nanny Association, Nannypalooza and NAYEC that will improve the nanny's skills. This can be a Win:Win for the family and the nanny.

Don't forget the words!

ThankYouA written expression of appreciation, including specific ways the caregiver does a great job and improves your life should always be included with a year end bonus. If you don't want to write it down, stop a moment and verbally deliver the message. Some caregivers make themselves available for overtime on short notice, are willing to work additional hours when your life is demanding, or thoughtfully engage your child or aging family member in activities that directly benefit the care recipient. Catch the caregiver 'being great' and acknowledge it.

Did you know that a recent human resources survey concluded that "more than half (53 percent) of employees admit they’d stay longer at their jobs if their bosses showed more appreciation."

Don't forget about the taxes...

All bonuses, whether cash or a gift, are taxable income to the employee. They must be reported as such on all employment tax documents, including Form W-2 at year end. In the eyes of the IRS, there is no such thing as a GIFT between an employer and an employee. Anything of monetary value given by an employer to an employee is considered compensation, subject to wage reporting and employment and income taxes.

 

Download your FreeABC Nanny Guide

INA Nanny Salary and Benefits Survey

 

International Nanny Association Nanny Salary SurveyThe International Nanny Association is conducting it’s 2014 Salary & Benefits Survey  now!  This survey collects valuable industry benchmarking information which helps both families and nannies.  If you are a nanny or nanny/ household manager, please take a few moments and take this survey.   The responses are confidential, but the results will be gathered and shared with the public. National and international media also reference the INA Salary Surveys.

Do you employ a nanny or a nanny/ household manager? Please share this survey with your employee.

Do you operate a nanny referral agency? Please take a few moments and  share this survey with your nannies via email and your social channels!

Thank you in advance for your participation. Families often ask the HWS team for information about nanny salaries and benefits, and we know this data is beneficial to all.

How a Nanny Addresses Pay on the Books with a Family

 

LegalNannyPayrollI recently attended Nannypalooza in Philadelphia where I was asked by a nanny in attendance if I could coach her on how to speak to her employer about being paid on the books. Immediately several other nannies joined the conversation, sharing that this is one of the most difficult conversations to initiate with their employers.

Clearly it is optimal to have this conversation early, as part of the nanny job interview. The reality is, however, that many nannies NEED the job they are interviewing for and are hesitant to raise an issue that could derail the job opportunity. How does a nanny who accepted a job paying cash under the table convince her employer that legal payroll is important to her?

#1 Recognize and acknowledge that the conversation is about money...

The fact is that legal nanny pay on the books costs both the employer and the employee money. The employer will be obligated to pay approximately 10% more in employer taxes - a significant amount in many families budgets. Often the amount the family pays the nanny exceeds the amount they pay for their mortgage or rent! The nanny pays taxes too - the family is entitled to collect 7.65% from the nanny's pay for their share of Social Security and Medicare taxes, and the nanny ultimately owes any income taxes that may be due.

It isn't all money out the window though! By paying legally on the books the family may be entitled to important tax breaks. These tax breaks typically offset 50 - 100% of the family's employer taxes, making this an easier decision for the family. The nanny too can qualify for tax benefits too - most importantly government subsidies for health insurance and potential eligibility for the Earned Income Tax Credit (EITC), a refundable tax credit for low income wage earners. In 2012, the average EITC was $2300 - often more than the total of deducted Social Security taxes and income taxes combined!

#2 Be clear that this is the right thing to do...

As Oliver Wendell Holmes Jr. so famously opined, "Taxes are the price we pay for a civilized society." No one actually likes paying taxes, yet without everyone paying their fair share, important social programs such as unemployment insurance and Social Security retirement benefits are not funded.

A nanny can begin by acknowledging that her employer wants to do the right thing. Often nannies and families both think by paying cash under the table the nanny receives more pay in her pocket. While this undeniably may be true and in the nanny's short term best interests, in the longer term the nanny may suffer and the family may put themselves at risk. How? All nanny jobs end, usually after a few years, because the children grow and the families needs change. Full time childcare evolves into part-time after school care, and the full time nanny is no longer needed. A nanny may not find a new job right away, and at that time legal unemployment benefits may be the only thing that allows the nanny to pay her rent or make her car payments. After the job ends, you may have to file for unemployment benefits to tide you over, an action that blows the whistle on both you and your former employer. Paying a bit now, and taking home a bit less every week is not ideal, but it will offer both you and your employer longer term benefits.

#3 Be a partner in the solution...

Remember, this conversation is about money! You can help your employer make the right decision by:

  • Indicate early in the conversation that you know they will have to start deducting taxes from your check, and you are okay with that.
  • Help the family understand what their obligations are. You can download HWS' free Guide to Household Payroll and share with your employer.

Did you know?

HomeWork Solutions provides free telephone consultations and we are delighted to help employers understand the rules, costs and how we can help make nanny tax compliance easy and affordable to them.

Nannies, Tips for YourFinancial Health

2015: Changes in Senior Care Payroll

 

Department of Labor Discusses Joint Employment, Changes in the Senior Caregiver Companionship Exemption and Announces Increased Enforcement

The Private Care Association, the voice of private duty home care, met in earlier this month in Orlando, FL and invited the US Department of Labor to discuss Joint Employment and Changes in the Companionship Exemption with its members. A guest appearance was made by Michael Hancock, Assistant Administrator for Policy, Wage and Hour Division of the U.S. Department of Labor and Melissa Murphy, Senior Attorney, Office of the Solicitor U.S. Department of Labor.  Mr. Hancock and Ms. Murphy addressed an anxious crowd of almost 200 independent homecare staffing agencies to discus joint employment, the expiration of the Companionship Exemption for home health agencies and stepped up enforcement by the DOL in 2015 related to the enforcement of the Fair Labor and Standards Act (FLSA).

The US DOL acknowledged that the senior care industry is subject to increased enforcement, and warned that many current industry practices place the senior care referral agencies and their clients at risk.

The Companionship Exemption:

Companionship Exemption Senior CaregiverThe federal Fair Labor Standards Act (FLSA) was amended in 1974 to specifically include domestic service workers. At that time, companions to the aged and infirm were the only domestic service workers who were exempted from the FLSA's minimun wage and overtime rules.

Effective January 1, 2015, the exemption officially end for home healthcare agencies that directly employ their caregivers. Families who privately employ caregivers may still qualify for a more limited companionship exemption and be exempt from the requirement to pay overtime and minimum wage.

To qualify, the privately employed caregiver's scope of duties must meet the new definition of a companion. Companionship services are defined as services that provide fellowship and protection to an elderly or disabled person.  Activities such as assisting with a puzzle or game or engaging the senior in casual conversation over a meal are examples of companionship activities.  In order to qualify for the companionship exemption a caregiver may not engage in any general housekeeping activities and may not spend more than 20% of their time providing personal care services, often known as Activities of Daily Living (ADLs), such as dressing, grooming, feeding, bathing, toileting and transferring; and Instrumental Activities of Daily Living (IADLs) which are tasks that enable a person to live independently at home, such as meal preparation, driving, light housework, managing finances, assistance with the physical taking of medications, and arranging medical care.

While the law changes on January 1, 2015, the Department of Labor has recently granted a 6 month stay of enforcement to allow homecare agencies and Medicaid programs ample opportunity to make necessary operational adjustments. Employers still run the risk of being separately sued by caregivers, as the law is still in effect.

Joint Employment

These changes coupled with increased enforcement from the DOL outline the increased need for home health referral agencies to ensure they are not acting as joint employers of caregivers. The US DOL stressed the need for referral agencies to clearly define to care recipients, families and caregivers that the families are the employers of the caregivers that they hire through their referral agency. 

Joint employment is the sharing of control and supervision of an employee's activity among two or more business entities.  This is often a hot topic among homecare referral agencies that do not employ their own caregivers because certain activities could cause the referral agency to be jointly responsible for overtime payments, FICA and federal and state unemployment taxes if 1) the proper employment taxes are not paid by the care recipient and 2) they are deemed a joint employer of a caregiver.

As Mr. Hancock and Ms. Murphy discussed, Joint employment is determined by applying the "economic realities" test, which examines a number of factors to determine whether a worker is economically dependent on an employer, thus creating an employment relationship.  Ultimately joint employment is decided by the courts based on economic dependence; however, the DOL has outlined the following factors the courts look at when making a determination of joint employment. 

  • whether a possible employer has the power to direct, control, or supervise the worker(s) or the work performed;
  • whether a possible employer has the power to hire or fire, modify the employment conditions or determine the pay rates or the methods of wage payment for the worker(s);
  • the degree of permanency and duration of the relationship;
  • where the work is performed and whether the tasks performed require special skills;
  • whether the work performed is an integral part of the overall business operation;
  • whether a possible employer undertakes responsibilities in relation to the worker(s) which are commonly performed by employers;
  • whose equipment is used; and
  • who performs payroll and similar functions.

HomeWork Solutions partners with senior care referral agencies nationwide to provide payroll and tax services to their client families who employ in-home senior caregivers. HWS' eldercare payroll services simplify payroll and tax compliance for the families, allowing family members to focus on focus on activities that more directly benefit their aging loved ones. Give us a call if you would like to learn more at 800.626.4829 or request a free telephone consultation.

 

FAMILY GUIDE TO SENIOR CARE ALTERNATIVES

 

 

New York City Paid Sick Leave Law for Household Employees

 

(October 1, 2014)

New York City's Paid Sick Leave Law DOES cover household employees. The coverage, however, is a bit different than for workers employed by commercial or public enterprises.


NYC Paid Sick Leave LawHousehold employees who have worked for the same employer for at least one year and who work more than 80 hours a calendar year earn
 two days of paid sick leave under New York City law. The two days of annual sick leave become available at the one-year anniversary of employment.  This applies to all household employees who work in NYC, regardless of where they live. The NYC-mandated sick leave is in addition to the three days of paid rest to which domestic workers are entitled under the New York State Domestic Workers Bill of Rights.

Household employers that already provide at least five days of any kind of paid time off (i.e., personal days, vacation and sick leave) would not be required to provide any additional sick time, either paid or unpaid, under the law.

Who is a household employee? 
New York State Law defines "domestic worker" (household employee) as someone who works in another person's home. A domestic worker's job include:

  • Caring for children or a sick or elderly person
  • Housekeeping chores
  • Other domestic duties performed in the employers' home

This law does not cover household workers who:

  • Work on a casual basis, such as part-time baby-sitters in the homes of their employers and work less than 80 hours in a calendar year
  • Are relatives of their employers or of the person(s) for whom they offer care

Upon termination of employment, the household employer is not required to pay the departing household employee for unused sick leave.  Employers can either pay out accrued but unused sick leave to their household employees annually or  permit employees to carry over accrued sick leave from year to year, up to a maximum of 2 days.

Example: A household employee has been employed for two years. In the second year of employement, the household employee was entitled to two days of paid sick leave. The employee used one day in the year. The employer may either pay out the additional day at the second anniversary date of employment, or credit the household worker with three days of paid sick leave in the coming year. 

How much does an employer have to pay an employee for paid sick leave? 
An employer must pay the employee the employee’s regular hourly rate at the time the sick leave is taken. Employees cannot be paid less than the full minimum hourly wage set by New York State law. As of December 31, 2013, the New York State minimum wage is $8 per hour. It will increase to $8.75 per hour on December 31, 2014 and to $9 per hour on December 31, 2015. 

Example: A household employee is regularly scheduled to work ten hours in the day. The household employee is ill and entitled to paid sick leave. The household employee must be paid for that day's regularly scheduled hours at her regular rate of pay.

What is the effective date for household employees? 
Household employees who began working for an employer on April 1, 2014 or earlier will accrue their first two days of paid sick leave on the latter of August 1, 2014 or their one year anniversary. 

10 Tips from the Best Nanny Industry Insiders About Nanny Job Satisfaction

 

Nanny Job SatisfactionWhen families hire a nanny, they enter the relationship with the best of intentions to establish a mutually rewarding long term relationship between the nanny and the family. You have gone to a lot of effort to locate this nanny, what actions can you take as the nanny employer to insure your mutual satisfaction? What are the keys to nanny job satisfaction?

HomeWork Solutions consulted with the most successful nanny recruiters and this is what they told us:

  1. Remember to acknowledge good performance! Katie Provinziano, owner of Westside Nannies, Los Angeles advises "A simple "thank you" goes a long way. Everyone loves a little positive affirmation and nannies are no different. Just because it's someone's "job" doesn't mean that we shouldn't acknowledge and appreciate their work. Give your nanny positive feedback and let her know when she's doing a great job or exceeding your expectations. Combining that "thank you" with a free massage or gift card to her favorite restaurant for a job well done will go a long way in employee satisfaction!"
  2. Document the nanny job details. "A nanny work agreement that precisely spells out the compensation, benefits, job description and specific household rules related to security, social media and confidentiality is a vital tool for both the family and the nanny to avoid misunderstanding and conflict in the relationship," advises HomeWork Solutions' Kathleen Webb. 
  3. Take the nanny employment relationship seriously and treat your nanny with respect. "Your nanny deserves to be treated as your peer, an equal. She plays a critical role in your household, a role that allows you to pursue other important interests secure in the knowledge that your children are in a safe and nurturing environment," advises Annie Davis, founder of Annie's Nannies in Seattle.
  4. Keep the nanny employment relationship professional. "Having an employee who works in your home can often be a slippery slope and you can fall from professional to too familiar very easily," suggests Katie Provinziano, owner of Westside Nannies, Los Angeles. "Refrain from asking your nanny about her latest date and, at the same time, don't over-share about your mother-in-law. If you wouldn't say it to a peer at work don't say it to your nanny. Keep the relationship warm, friendly, and professional - but don't overstep your boundaries."
  5. Respect working hours and relieve the nanny on time. "As an agency owner, working mom and nanny employer, I know as well as anyone how hard it is to be home on time. In the three years my nanny has worked for me, there have certainly been days when a timely arrival it's just not possible--I'm late, I call, and she understands--but I always try," share's Jami Dennis of ABC Nannies in Denver. "Being timely is respectful. Like any employee, it's important your nanny knows you that respect them, you respect their time, and you respect what they are contributing to your family. Treating your nanny with kindness, gratitude and a healthy dose of respect will go a long ways to ensure they are satisfied in their position for years to come."
  6. Always pay the nanny on time. "You wouldn't be happy if you had to remind your employer that today is payday, or if your employer forgot to pay you for your overtime," suggests HomeWork Solutions' Kathleen Webb. "Nannies particularly appreciate when the family uses a nanny payroll company with direct deposit payroll, as they don't need to run to the bank after you get home from work on Fridays to deposit the paycheck."
  7. Avoid micromanagement. "In any family/nanny employment relationship, there must be some flexibility and autonomy in order to foster a good long-term working environment," advises Marc Lenes, Placement Manager, Wee Care Nanny Agency, Stamford CT. "If you have an excellent nanny that is experienced, loving, proactive, reliable, trustworthy, etc., remember the adage, "one should not lose sight of the forest for the trees."
  8. Pre-fund a household petty cash jar, or provide your nanny a family credit card. Michael Girard, owner of Childcare Solutions, Beachwood, OH cautions "No wage earning employee should ever be expected to finance the costs of working for their employer. That goes double for wage earners who generally live from pay-check to paycheck to pay their own bills. You trust your nanny with your children – trust them with a check card or credit card to use to pay for the things you want them to purchase, whether it’s meals, groceries, activities or gas for the car they use to transport your kids. If you can’t provide a check card, make sure you leave them enough cash to cover all anticipated expenses – as well as the unanticipated things that tend to come up in the course of a week. Be sure to detail your expectations and agreements regarding expense in your work agreement so that there is no confusion and there are no misunderstandings."
    “I cared for my last employers three active children for a year and I loved both the kids and the parents. But I declined to renew my employment with them beyond the first year because every week it was humiliating to have to ask for reimbursement for the cash I had to pay to cover their child care expenses. They were always late in returning my own money to me – and I often had to argue about the reimbursement amount. Even getting reimbursed a fair amount for the use of my car and gas became a problem. I was very sad to have to leave the position but I needed to move on to a family that respected me more.” – Christina H.
  9. Give direction! "We have found that the family/nanny relationships that last the longest are those with consistent and honest communication," Mom's Best Friend's Kim Winblood, Vice President (Dallas/Ft. Worth TX), reports.  "The "daily download" is essential and should not be overlooked as it keeps both the parent and nanny accountable for realistic expectations and any correction that might be needed.  In addition, at a minimum, quarterly and annual meetings should be on the calendar to discuss any adjustments needed due to the child’s growth or other factors that might have an effect on the initial job description.  Nannies value and appreciate relationships with open communication."
  10. Maintain realistic expectations! ABC Nannies' Jami Dennis (Denver) advises "While you may feel like you've hired a Super Nanny, it's important to be realistic when it comes to what needs to be accomplished in a day. As a parent, if you couldn't get through the to-do list in 8 hours, it's unfair to expect your nanny to be able to do so. My advice, as a working mom with a full-time nanny, is to prioritize what's most important, show appreciation when your nanny does more than expected, and be realistic about what can be done in any given day."

     

A special thank you to the wonderful industry experts who have contributed to this post. These individuals have all assisted hundreds, if not thousands, of families in their careers and truly know what works and what doesn't. If you are searching for a nanny and want expert advice and guidance, HomeWork Solutions' recommends agencies who belong to the International Nanny Association or the APNA, industry professional associations that require members to adhere to a transparent code of conduct. These agencies are the crème de la crème and cannot be matched by do-it-yourself online options.

6 Things About Household Payroll Tax Every Caregiver Should Know

 

Payroll Literacy for household employeesNannies and senior caregivers who work in a private home, receive instructions and directions from the family employer and are paid by the family (either directly or via a household payroll company) are employees in the eyes of the IRS and US Department of Labor. As employees, many aspects of compensation and payroll are governed by payroll and labor law, no different than employees in a department store, factory or othr workplaces. Tax and labor law that covers household employees are often unique, and all too often neither the family nor the caregiver know the important details. Household payroll literacy on the part of a nanny or senior caregiver is important as they negotiate pay and benefits with their employers, many of whom don't understand these key points themselves.

  1. Employees receive a W-2 form at the end of the year, not a 1099 form. This is important! 1099 Independent Contractors pay 100% of their own taxes; employees are issued a W-2 form and the employee and employer both contribute to the taxes.
  2. There is a distinction between payroll taxes and income taxes. Payroll taxes include Social Security, Medicare and unemployment taxes, and are an employer responsibility. Social Security and Medicare are shared taxes; the household employer may deduct 7.65% from the nanny caregiver's paycheck to fund the employee portion, and the employer will match this amount and must send the entire tax (15.3%) to the IRS. Unemployment taxes are totally paid by the household employer. Income taxes are ultimately the nanny caregiver's responsibility; the household employer may agree to deduct income taxes for the nanny caregiver from her paycheck but has no legal obligation to do so. It is critical for the nanny caregiver to understand what taxes are being deducted from their paycheck and to make provisions, if necessary, to pay their income taxes independently.
  3. Household employees are hourly, non-exempt employees. Your compensation agreement should state your wage in a rate per hour, and you are entitled to be paid this rate for all hours worked.
  4. Household employees are entitled to a detailed itemization of paycheck calculations and deductions. In the commercial world, employees receive a paycheck that itemizes hourly and overtime rates, the number of hours being paid in the period, and itemized deductions for the Social Security, Medicare and federal and state income taxes (where applicable) being deducted. A household employee is entitled to receive the same information from their employer. 
  5. Household employees who do not live with their employer are entitled to overtime pay for hours over 40 in a 7 day work week, at no less than 1.5 times the hourly rate of pay. Many states extend the overtime benefit to household employees who live with their employer - it is important to familiarize yourself with the law where you work.
  6. The state where you work will determine your allowed pay frequency. Most household workers must be paid weekly or bi-weekly (every other week). Semi-monthly and monthly pay, where permitted, is discouraged due to the difficulty of tracking and paying overtime, which is ALWAYS based on a 7 day work week.
HomeWork Solutions has a short video tutorial - the Anatomy of a Paycheck - that can help the household employee and the household employer both understand the issues above.
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