Nanny Rate - Tax Question

[Anonymous]

I’m new to the world of hiring a nanny (thanks to COVID) and I’m learning that a lot of nannies actually *want* to be paid under the table in cash. We prefer for various reasons to employ someone all above board with applicable taxes, add them to our insurance, etc., but it feels like we’re at a disadvantage compared to all the families who are apparently willing to do this.

It seems like $23-25~ is the going rate for watching 2 kids where we are, but anyone willing to use a payroll service to pay taxes now expects *us* to increase the rate so that their take home salary is the same, so now this is bringing us up close to $30/hour. We want to pay fairly, but we aren’t exceptionally rich. We’re having to make some large budget cuts to make this happen. I just don’t think we can swing a $30/hour nanny.

Is this normal for nannies to expect more pay for doing things legally? I’m trying to explain that this helps cover them with unemployment insurance and future social security retirement. We’re also offering paid holidays, accrued leave, and trying to be overall generous employers. Am I sucker for feeling like we need to pay extra to do this legally or is it standard that anyone eligible to work in the U.S. and willing to pay taxes is going to charge a higher rate?

[Anonymous]

A professional, career nanny should advertise their rate as a gross rate. Being paid under the table shouldn’t even be a thought for a nanny who is serious about their profession, meaning “adding x amount of dollars” shouldn’t be an issue. For instance, I advertise my hourly rate as $22-30/hr and that’s pre tax. I accepted a position for one child at $24/hr pre taxes. Don’t hire anyone under the table, you’ll be sorry in the long run as if you get caught, you will be technically responsible for paying back taxes.

[Anonymous]

Anonymous wrote:A professional, career nanny should advertise their rate as a gross rate. Being paid under the table shouldn’t even be a thought for a nanny who is serious about their profession, meaning “adding x amount of dollars” shouldn’t be an issue. For instance, I advertise my hourly rate as $22-30/hr and that’s pre tax. I accepted a position for one child at $24/hr pre taxes. Don’t hire anyone under the table, you’ll be sorry in the long run as if you get caught, you will be technically responsible for paying back taxes.

Yes, I totally agree about not wanting to risk hiring anyone under the table. So far most of the people we’ve interviewed have been college/grad students or through word of mouth referral. Maybe I need to sign up for Care.com or somewhere I’m likely to find a career nanny.

It’s hard because we’re looking for part time 25-30 hours per week and I think that limits our pool to those who just want to do this part time for cash.

[Anonymous]

Previous poster again- I found my position on DCUM! But it’s a good idea to use all avenues to find someone who wants to be paid legally. You’re offering rates appropriate for the area so you should be able to find someone good!

[Anonymous]

Anonymous wrote:Previous poster again- I found my position on DCUM! But it’s a good idea to use all avenues to find someone who wants to be paid legally. You’re offering rates appropriate for the area so you should be able to find someone good!

Thank you for sharing your knowledge. Becoming an employer is all so new and sudden for us!

[Anonymous]

OP, part of the reason you’re paying higher is because it’s part time, which always increases the rate; it sounds the rate is $23-25 for full time, so assume $24-26 for part time. Now, with everyone and their sister wanting a nanny due to distance learning and covid, rates are higher. If you intend to ask a nanny to limit outside interaction to limit covid risk, $26-28 (gross) would be what I’d expect.

[Anonymous]

Anonymous wrote:OP, part of the reason you’re paying higher is because it’s part time, which always increases the rate; it sounds the rate is $23-25 for full time, so assume $24-26 for part time. Now, with everyone and their sister wanting a nanny due to distance learning and covid, rates are higher. If you intend to ask a nanny to limit outside interaction to limit covid risk, $26-28 (gross) would be what I’d expect.

This makes sense. We had hoped for $25 or less. I don’t mind bumping up to $26~. But I was playing around with tax calculators and we’d have to pay over $30/hour to make the take home pay match what a person would bring home with cash payments, which is a huge price jump.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP, part of the reason you’re paying higher is because it’s part time, which always increases the rate; it sounds the rate is $23-25 for full time, so assume $24-26 for part time. Now, with everyone and their sister wanting a nanny due to distance learning and covid, rates are higher. If you intend to ask a nanny to limit outside interaction to limit covid risk, $26-28 (gross) would be what I’d expect.

This makes sense. We had hoped for $25 or less. I don’t mind bumping up to $26~. But I was playing around with tax calculators and we’d have to pay over $30/hour to make the take home pay match what a person would bring home with cash payments, which is a huge price jump.

It’s not your responsibility to calculate net. You have no idea what a nanny’s tax situation is. Your responsibility is to advertise a gross rate, guarantee hours, and file legally. Once you hire someone, file the I-9 and have the nanny do the W-4.

[Anonymous]

I have never had a problem finding a nanny who is willing to be paid on the books, so you need to widen your search.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP, part of the reason you’re paying higher is because it’s part time, which always increases the rate; it sounds the rate is $23-25 for full time, so assume $24-26 for part time. Now, with everyone and their sister wanting a nanny due to distance learning and covid, rates are higher. If you intend to ask a nanny to limit outside interaction to limit covid risk, $26-28 (gross) would be what I’d expect.

This makes sense. We had hoped for $25 or less. I don’t mind bumping up to $26~. But I was playing around with tax calculators and we’d have to pay over $30/hour to make the take home pay match what a person would bring home with cash payments, which is a huge price jump.

NP, but PP hit the nail on the head. With full-time work, you generally get some overtime, which is 1.5 times the regular rate. With part-time work, they will never get overtime and depending on the schedule it may be hard for them to secure any other work, so that may be the reason they want to be paid more.

[Anonymous]

Op the average nanny job is 45-60 hours per week assuming parents work 40-50 hours with a commute on either end (in normal times) so keep in mind that your job is much more part time than you think as per nanny industry standards.

For what it's worth, I had a horrible time finding a family willing to pay me on the books!

[Anonymous]

I had a difficult time finding a family willing to pay legally. I interviewed with at least 10 families, before I found a family willing to pay legally. So it’s not always the nanny that wants to be paid cash.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP, part of the reason you’re paying higher is because it’s part time, which always increases the rate; it sounds the rate is $23-25 for full time, so assume $24-26 for part time. Now, with everyone and their sister wanting a nanny due to distance learning and covid, rates are higher. If you intend to ask a nanny to limit outside interaction to limit covid risk, $26-28 (gross) would be what I’d expect.

This makes sense. We had hoped for $25 or less. I don’t mind bumping up to $26~. But I was playing around with tax calculators and we’d have to pay over $30/hour to make the take home pay match what a person would bring home with cash payments, which is a huge price jump.

NP, but PP hit the nail on the head. With full-time work, you generally get some overtime, which is 1.5 times the regular rate. With part-time work, they will never get overtime and depending on the schedule it may be hard for them to secure any other work, so that may be the reason they want to be paid more.

This. I recently hired a nanny and I know for a fact that she had an offer to watch fewer kids for the same rate- but we were offering 50 hours a week and the other family was only offering 30 so she accepted our offer.

[Anonymous]

We hired a nanny about two months ago who came with excellent recommendations, her rate is $26 an hour for 40 hours to be paid on the books and $28 for overtime cash. She is happy and we are as well, especially our daughters.

[Anonymous]

Anonymous wrote:We hired a nanny about two months ago who came with excellent recommendations, her rate is $26 an hour for 40 hours to be paid on the books and $28 for overtime cash. She is happy and we are as well, especially our daughters.

If she files for correct pay on the overtime hours later, you’re screwed.