It just seems that by "complying" with the law, you are going to be paying more money out of your pocket and have more accounting work to do.

Who is going to benefit from the extra money every month?

Right...The government.

That's why they make these rules.

Sheesh. Such a head-ache!!

Anyway, good luck to you OP.

It would be nice to able to just pay cash... the govt does not make complying with the law easy! But given DH's job, we have to follow the rules!

For just fifteen hours a week of babysitting, I would just pay her in cash + not worry about all this complicated withholding stuff.

It only complicates matters.

She isn't even working part-time hours.

Thanks for the great suggestions everyone! I told the babysitter this evening that the $1000 fee was too high for us to swallow but we'd figure out the best way to withhold taxes, etc. without using HomePay. We'll definitely check the software option out as well as the same bank transfer. Sounded like she understood where I was coming from and vice versa so no negative feelings on either side.

If you want, there are some DIY solutions to payroll calcuations. We used nannypay, which is about a $100 software package. It does all the calcuations, prints a paystub, and helps with end of year tax forms.

We also use a bank transfer from USAA. It does take a full business days to clear, but our compromise is that we initiate the deposit the day before payday, then it clears by end of business the day of.

Anonymous wrote:Just FYI, you can automatically deposit money even if you don't have the same bank. We bank with USAA, our au pairs have always banked with Wells Fargo and they get an automatic deposit every week.

Are you sure it is actually available to your nanny the same day? We have accounts with two major banks and that isn't an option. It is 2-3 days before the funds are actually available to the receiver which isn't the same thing as a payroll direct deposit IMO. By doing it with the same bank, I can calculate our nannies payroll on Thursday night, and the money is available first thing Friday.

Anonymous wrote:Just FYI, you can automatically deposit money even if you don't have the same bank. We bank with USAA, our au pairs have always banked with Wells Fargo and they get an automatic deposit every week.

Do you pay a fee for the transfer?

MB here. It's not hard to figure out the federal withholding at all. State is a little more complicated because you have to get another number, pay it quarterly, etc. (but you're already doing that for unemployment). You can do that yourself, too. I do.

If you don't want to set up another account, I would also ask if you could pay her a mid-week check at some point to cover three days worth of pay, and then she will just need to reset "payday" in her mind ahead three days.

Just FYI, you can automatically deposit money even if you don't have the same bank. We bank with USAA, our au pairs have always banked with Wells Fargo and they get an automatic deposit every week.

Do you know how much of a pain estimated taxes are, especially for a stupid 15 hour a week job? It is your right to refuse withholding, but I wouldn't work for you. If you don't want the headache of being an employer, don't have an employee. I'm sure your boss withholds your taxes. It is a normal expectation that if you expect me to report the income, you'll do the work of withholding it.

I know. I could see paying it if she were being paid a full time salary or if we offered the job knowing that we were using the service (and adjusted the pay accordingly).

The $1,000. annual fee is outrageous!

OP here. I assume you mean it is up to the employee. Yes, we know it isn't required and we've always just told our babysitters they should pay estimated taxes. Our current babysitter asked us to withhold taxes for her because that's what she's used to. (She also asked for a credit card to pay for expenses, which we gave her...)

Thanks for the suggestion about setting up an account at the same bank--that's an excellent solution! Maybe we can compromise and do direct deposit but not the tax withholding.

1. you aren't required to withhold federal or state taxes - it is up the the employer
2. if you are doing the calculations yourself already, why not set up an account where she banks. That is what I did with our nanny and do a direct bank to to bank transfer which is available immediately

We recently hired a babysitter to work 15 hours per week. We told her up front that we needed her to pay taxes and we would cover SS, unemployment, etc. After two weeks of work she asked if we could 1) withhold taxes for her and 2) do direct deposit because it took 3+ days for the funds to become available from a check deposit, which was a hardship. She suggested using HomePay, which her previous employer used. While I understand it would be much more convenient for her, I am balking at the fees! It would cost ~$1000/year to use HomePay with Direct Deposit. Her annual pay will come to about $21,000, which means the HomePay fee is almost 5% of her salary!

Should I just suck it up and pay for the service? Should I suggest splitting the fee? We've never had this issue before in the 12 years we've had babysitters!