How Much Do Nannys Cost?

Families’ nanny costs can depend on her experience, the number of children she
cares for and any additional responsibilities such as cooking, cleaning or running
errands. Families should also decide whether they would like to provide their nanny
with her own vehicle or reimburse her for transportation expenses.
GTM’s household advisors can assist in finding a full service payroll and tax
company that will manage withholding taxes and filing requirements for you.

How Much Do Nannys Cost?

 

Background Checks

Background checks on potential nanny candidates are costly but necessary for child
safety. You should look for indicators such as criminal convictions, education
backgrounds and driving records which might influence their ability to safely care for
your kids.
As with any service, it is imperative that any nanny screening company you hire
adheres to the Fair Credit Reporting Act and obtains consent from applicants before
conducting searches. A reliable screening service should also verify an individual’s
employment history and education background.
Ask any potential nannies for references who can provide an impartial review of
their work. Be wary if a potential nanny claims they cannot due to confidentiality
agreements; this may be used as an attempt at concealing negative work history. In
addition, be sure to obtain proof that the potential nanny is CPR/first aid certified.

Workers’ Compensation

 

As long as you pay your nanny in any other form than cash, workers’ compensation
insurance premiums vary by state; many families opt for payroll and accounting
services like GTM which provides coverage specifically tailored to household
employees.
Workers’ comp insurance provides protection to your nanny in case she is injured on
the job, with medical costs and lost wages covered as part of its benefits. Workers’
comp is typically mandatory in most states and should be included on any
employment documents you create for her.
Some families may hesitate to go the extra step of securing workers’ comp, but it
should definitely be considered. Workers’ comp can protect you from expensive
fines if a nanny is injured at home and cover costs for temporary care if an injury
does arise.

 

Health Insurance

 

Nannies are highly qualified childcare professionals. With years of experience and
advanced training under their belts, specialization in music or the arts and other
specialized skills. Many also possess additional certifications such as CPR and first
aid certifications.
Families aren’t required to offer health insurance for their nannies, but should
seriously consider doing so as it helps attract qualified candidates and saves them
money on payroll taxes as the premium is considered non-taxable compensation.
Another excellent solution for families to consider is a QSEHRA (Qualified Small
Employer Health Reimbursement Account). This IRS-approved tax-free plan allows
employers to set aside a monthly allowance amount for employees’ healthcare costs
– such as individual health insurance premiums or any out-of-pocket items that may
arise.

 

Retirement Plan

 

Many families opt to offer their nannies retirement plans, such as 401(k) plans which
can be costly to establish and manage or SIMPLE or Roth IRA accounts which offer
cheaper investments. Furthermore, it’s common practice to offer them
transportation reimbursement or allowance.
Families seeking nanny services may also opt for live-in nannies as an alternative to
hourly commuter nannies, particularly if their young children require special
attention and care. This may be particularly beneficial when providing for small
children who require constant supervision.
Families considering hiring a live-in nanny should carefully consider the additional
costs of housing, food and utilities; in addition to any commuting or additional duties
required of her. It is common practice for families to hire a payroll and tax service
which will handle withholding and filing of taxes for them.

 

Taxes

 

Nanny taxes can be an unexpected expense that many families neglect to factor
into their budget. As an employer of a nanny, you’re required to pay Social Security
and Medicare taxes (approx. 7.65%) as well as federal unemployment tax if
applicable.
Additionally, nannies should be compensated for any mileage or toll costs they
incurred on the job. Some families also provide them with a monthly metro card to
ease their commute.
Nannys should receive annual raises that range from 2-3% cost-of-living increases to
merit increases. Some families opt for payroll services to manage payments and
taxes for their nannies, which can add an expense. These services usually charge
monthly fees and offer online access to paychecks, W-2s and tax documents; plus
some employers contribute funds into employees’ dependent care flexible spending
accounts that reduce taxable wages.

 

Leave a Comment

We use cookies in order to give you the best possible experience on our website. By continuing to use this site, you agree to our use of cookies.
Accept