Total on the books nanny costs

[Anonymous]

New to all this and trying to figure out how much I should set aside for a nanny. Assuming an hourly rate of $25-$30 at 40hr/week, what can I expect to need all in for the nanny- I am trying to figure out how the taxes work. I assume an off the books nanny would just be hourly rate x hours per week x 52. I just don’t know how the taxes work with an on the books nanny. Any help is appreciated.

[Anonymous]

I would assume a 10-15% markup to pay on the books. For us it's been about 12%, so I multiply monthly hourly pay by 1.12 to estimate.

Don't forget that you will also need workers compensation coverage for your home/worksite. We pay about $700 a year.

Some nannies ask for a health insurance stipend of $150-300 a month.

You will also typically pay a holiday bonus of 1-2 weeks pay and some nannies ask for a bonus at the one year mark of service as well.

[Anonymous]

Employer fica match is 7.5%.
You need unemployment insurance and worker’s compensation insurance.
If she’s driving your vehicle, you’ll need to add her to the policy, or you’ll need to cover the difference between personal and commercial if she drives her own for work.
Either way, if someone damages the vehicle during work hours, you cover it.
If she needs a parking space where you live, you pay for it.
If she takes your child on public transportation or does errands for you, you cover the transportation cost.
If you want her to leave her personal phone at home, you cover the cost of a work phone that only has your information and emergency contacts.
Some nannies require health insurance as part of their benefits, while others do not.
You will need to provide pto and vacation; you can cover it, or you can pay someone else to fill in.

You need to factor in yearly raises and raises if you have more children, bonuses for birthday and Christmas, and possibly an extra bonus or two if she bends over backwards when you need extra help (ex: 24 hour care while your spouse is traveling out-of-state and you have a medical emergency).

Don’t forget that you are responsible for time and a half if you go over 40 hours.

If you choose not to pay on the books, I’d suggest setting aside the money for fica and the fines as you go.

[Anonymous]

Add about 10-15% to hourly pay calculations.