More common to pay taxes?
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Anonymous
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I am starting a nanny share with another family, and we are trying to figure out if it is more common to cover the nanny's taxes or not. We will pay for the Medicare, unemployment, worker's comp, and Social Security over and above the nanny's wage. We will use a service to pay the nanny so that taxes can be automatically withheld. However, we'd prefer not to pay the taxes.
What do you all do? |
Anonymous
If its being withheld from her earnings, then she is paying it not you. If you are asking if you have to withhold for her, the answer is no, but Im sure your nanny would appreciate not having to fuss with it come tax time. |
Anonymous
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Op here - I'm sorry. I wasn't clear. Do most people pay the agreed upon rate (let's say 600.00 a week) which is before taxes, or do most people pay the 600.00 rate plus whatever taxes are required (thus making the out of pocket rate for the employer much higher).
We will have the service take care of the withholding of the taxes - I just don't know if we should cover the expense of the taxes or have the 600.00 a week be the gross salary. |
Anonymous
Typically the rate that is agreed upon ($10/hr, $600/wk, whatever) is the gross salary. Your contributions go on top of that, nanny's contributions come out of that. However, you want to make sure you're clearly discussing this as gross pay, and say as much in your contract. |
Anonymous
+1 Negotiate based on gross wage not net |
nannydebsays
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You need to pay nanny a gross rate and have her taxes withheld from that fixed weekly amount of money. It's *possible* to "pay her taxes" as her employer, but it's 100 times more complex and it's really not worth it. Speak to any of the nanny tax companies and get the scoop. If the candidate is asking to "take home" a certain amount each week, it's possible to work backwards from that (her NET income) and find the corresponding gross hourly rate and weekly pay. |
Anonymous
| I think our payroll service (gtm) will figure out how to let you pay the nanny's share of taxes. It is complicated to figure out because the amount you pay for her taxes is itself taxable income. Our nanny asked us to do it but we decided it was too complicated and just offered her a gross weekly amount she was happy with. |
Anonymous
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Just a thought: you need to be very clear when negotiating pay to explain what it means to be gross or net. I've had a number of candidates express confusion over the impact of these terms on what they're getting paid. So it may be best to actually explain the potential impact on the pay if you're negotiating gross. For instance, if you're talking average full-time Nanny salary in the DC area, the difference can be well over a hundred a week. While it's true that most employment relationships discuss salary in gross terms, many Nannies just want to know the bottom line and unless you're clear, could be surprised by the difference in their take home.
I know what I paid my last Nanny, and what her pay stub said in terms of the difference between her weekly salary on a gross v. net basis (I use a payroll service). When I'm negotiating with a new Nanny, I sometimes refer to the difference in the last Nanny's pay to be sure we're on the same page in negotiating pay. |