Nanny hourly rate (net vs gross)

[Anonymous]

Hi - I am about to hire a nanny for the first time. Common hourly rates I hear in NW DC for one toddler go from $17-20 per hour. It's getting really confusing because I'm not sure if this is supposed to be gross or net. The nannies I have talked to seem to want a "net" paycheck. When I ask other parents, they tell me they just pay for the employer portion of the taxes and that nannies handle their own taxes, so they agree that they provide the nanny with a "net" paycheck. From my understanding, social security and Medicare taxes are shared, with one portion paid by employer and another portion paid by the employee. Therefore, the employer needs to withhold Medicare and Social Security taxes from the employee. I think it seems fair to me that the hourly rates are "gross" since I have no control of the tax situation of my nanny and how that is going to affect her withholdings.

Any thoughts on this? Do you think a fair hourly rate of $17 or $20 per hour should be gross or net? This can make a huge difference in the employer budget!
Thanks for your input.

[Anonymous]

We pay $18 gross and withhold taxes. However many candidates I interviewed didn't want to do taxes at all. Not an option for me an my job. $18 an hour gross ends up at about $14-$15 net. They should get a decent tax return in April. But I get why nannies didn't want to pay taxes. We pay our employee portion on top of that. Some families offer to pay the employee portion as well- so that another 7% of nanny pay that you budget for.
You have to withhold fica but you don't have to withhold federal and state. But in that case the baby has to figure those out herself at the end of the ear and still pay the irs.

[Anonymous]

After taxes .

[Anonymous]

Gross. Always negotiate on gross salary. Otherwise, why wouldn't a nanny claim "0" deductions, get the largest possible amount taken from her check, and then get a huge refund in April, all the while you are "making up the difference" so that she nets $17-$20/hr.

Or, don't pay legally. I'm not willing to do that, so I negotiate on gross, pay my portion of FICA, pay unemployment insurance, and pay for Worker's Comp. I withhold the employee FICA, Federal, and State income taxes.

If your range is too low for where you live, you'll know because you won't find candidates.

[Anonymous]

Gross is the answer.

Also keep in mind that you have some wiggle room in your rate depending on how many hours you need. We pay 10 hours of OT per week and so pay about $18.50/hour for two kids, which is on the low end. If you only need 30-40 hours per week, a slightly higher rate might be in order. But in general, as the PP said, if you don't get candidates you'll know it's too low.

[Anonymous]

Thanks for the detailed answers. It makes more sense to me now.

[Anonymous]

Gross and 17 is high