Nanny salaries - question about taxes RSS feed

post reply Forum Index » Employer Issues
[Post New]06/23/2014 15:01
quote
LeslieDC

Member Offline
Hello -

My neighbor and I are looking into hiring a nanny for a nanny share and are a bit confused about the taxes. When a nanny tells us she gets $20/hour (for example), does that mean that is her take home pay after we handle the taxes, or is that her gross pay from which taxes are then deducted? I have gotten various points of view on this.

Thanks for your feedback!
[Post New]06/23/2014 15:09
quote
Anonymous
Ask the nanny what she means (in my experience, $20 net would be a very high wage for a nanny share around here).

But regardless of what the nanny wants, as an employer, it would not be wise to pay your nanny a "net" hourly wage. Wages and taxes are calculated on gross amounts. The nanny is an adult, and should pay income taxes like any other wage earner. If she wants to negotiate a higher wage to try to account for what she might owe in income taxes, she is free to try. But any agreement (and there should be an agreement in writing) should specify the hourly wage in gross terms, not net. FYI -- before you employ a nanny, I strongly recommend that you read IRS Publication No. 926, the IRS Tax Guide for Household Employers.
[Post New]06/23/2014 15:11
quote
Anonymous
The wages you pay are ALWAYS gross. If a potential employee seems not to understand this concept, you had best move on to the next.
[Post New]06/23/2014 15:12
quote
Anonymous
Anonymous wrote:Ask the nanny what she means (in my experience, $20 net would be a very high wage for a nanny share around here).

But regardless of what the nanny wants, as an employer, it would not be wise to pay your nanny a "net" hourly wage. Wages and taxes are calculated on gross amounts. The nanny is an adult, and should pay income taxes like any other wage earner. If she wants to negotiate a higher wage to try to account for what she might owe in income taxes, she is free to try. But any agreement (and there should be an agreement in writing) should specify the hourly wage in gross terms, not net. FYI -- before you employ a nanny, I strongly recommend that you read IRS Publication No. 926, the IRS Tax Guide for Household Employers.


+1

You and the other share family need to decide what your pay range is in gross terms, including any benefits, reimbursements (like mileage), and FICA taxes. Then, before you ask the nanny her rates, you need to specify that you are talking about gross per hour rates, and that you will be deducting her share of FICA taxes. It is optional to deduct income taxes, but it is still her responsibility to pay them.
[Post New]06/24/2014 07:17
quote
Anonymous
Anonymous wrote:
Anonymous wrote:Ask the nanny what she means (in my experience, $20 net would be a very high wage for a nanny share around here).

But regardless of what the nanny wants, as an employer, it would not be wise to pay your nanny a "net" hourly wage. Wages and taxes are calculated on gross amounts. The nanny is an adult, and should pay income taxes like any other wage earner. If she wants to negotiate a higher wage to try to account for what she might owe in income taxes, she is free to try. But any agreement (and there should be an agreement in writing) should specify the hourly wage in gross terms, not net. FYI -- before you employ a nanny, I strongly recommend that you read IRS Publication No. 926, the IRS Tax Guide for Household Employers.


+1

You and the other share family need to decide what your pay range is in gross terms, including any benefits, reimbursements (like mileage), and FICA taxes. Then, before you ask the nanny her rates, you need to specify that you are talking about gross per hour rates, and that you will be deducting her share of FICA taxes. It is optional to deduct income taxes, but it is still her responsibility to pay them.

Why would you not deduct income taxes? Sounds pretty stupid.
[Post New]06/24/2014 14:17
quote
Anonymous
Just ask her, OP. In the mean time, find a nanny payroll calculator that will help you determine what your total costs. Some families pay the employee portion of income taxes as a perk but it is by no means the standard.
[Post New]06/24/2014 15:44
quote
nannydebsays

Member Offline
Negotiate in GROSS hourly wage, OP. And do so only once you and your share partner have determined your childcare budget, which should include mileage to pay nanny, and your share of taxes, and any costs associated with using a payroll company.

If each of you have an absolute max budget of $15/hour, you might want to start at $10/hour each to allow a little room for raises as well as the above yearly costs.
[Post New]06/24/2014 18:27
quote
Anonymous
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:Ask the nanny what she means (in my experience, $20 net would be a very high wage for a nanny share around here).

But regardless of what the nanny wants, as an employer, it would not be wise to pay your nanny a "net" hourly wage. Wages and taxes are calculated on gross amounts. The nanny is an adult, and should pay income taxes like any other wage earner. If she wants to negotiate a higher wage to try to account for what she might owe in income taxes, she is free to try. But any agreement (and there should be an agreement in writing) should specify the hourly wage in gross terms, not net. FYI -- before you employ a nanny, I strongly recommend that you read IRS Publication No. 926, the IRS Tax Guide for Household Employers.


+1

You and the other share family need to decide what your pay range is in gross terms, including any benefits, reimbursements (like mileage), and FICA taxes. Then, before you ask the nanny her rates, you need to specify that you are talking about gross per hour rates, and that you will be deducting her share of FICA taxes. It is optional to deduct income taxes, but it is still her responsibility to pay them.

Why would you not deduct income taxes? Sounds pretty stupid.


It's not required by the IRS for domestic employers. The nanny can do her own estimated taxes. If you're not using a payroll service, federal taxes are simple to withhold, but state taxes can be much more complicated (at least they are in Maryland).
[Post New]07/09/2014 19:29
quote
Anonymous
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:Ask the nanny what she means (in my experience, $20 net would be a very high wage for a nanny share around here).

But regardless of what the nanny wants, as an employer, it would not be wise to pay your nanny a "net" hourly wage. Wages and taxes are calculated on gross amounts. The nanny is an adult, and should pay income taxes like any other wage earner. If she wants to negotiate a higher wage to try to account for what she might owe in income taxes, she is free to try. But any agreement (and there should be an agreement in writing) should specify the hourly wage in gross terms, not net. FYI -- before you employ a nanny, I strongly recommend that you read IRS Publication No. 926, the IRS Tax Guide for Household Employers.


+1

You and the other share family need to decide what your pay range is in gross terms, including any benefits, reimbursements (like mileage), and FICA taxes. Then, before you ask the nanny her rates, you need to specify that you are talking about gross per hour rates, and that you will be deducting her share of FICA taxes. It is optional to deduct income taxes, but it is still her responsibility to pay them.

Why would you not deduct income taxes? Sounds pretty stupid.

Could you expand on this? My nanny lives in MD and I'd like to withhold her state income tax for her. Is it not as simple as filling out the MW507 (or whatever it is) like for federal?

It's not required by the IRS for domestic employers. The nanny can do her own estimated taxes. If you're not using a payroll service, federal taxes are simple to withhold, but state taxes can be much more complicated (at least they are in Maryland).
post reply Forum Index » Employer Issues
Message Quick Reply
Go to: 

Search   Recent Topics   Hottest Topics