How Much Does It Cost For a Nanny to Care For Your Children?

How Much Does It Cost For a Nanny
to Care For Your Children?

Nannies provide invaluable services to families, often becoming like another
member of the household. Therefore, their salary must reflect the value of their
Families should account for nanny taxes, similar to employment taxes paid by other
employees. Many families use payroll services to handle this aspect of nanny hiring
so as to reduce tax filing complexities and administrative headaches.



If you decide to hire a live-in nanny, their salary will play a critical role in your total
costs. Their pay should directly correlate to their experience and education – for
instance a new nanny with only an associate degree should not expect to make as
much money compared to someone who holds bachelor’s or master’s degrees in
early childhood education.
Pay rates will depend upon the number of children a nanny cares for; those who
require more hours should compensate accordingly with higher pay rates for their
Some families opt to include household duties as part of a nanny’s job description in
order to cover tasks such as cooking, laundry and running errands. Furthermore, 54
percent of families in a Sittercity survey regularly or always tip their nanny.
Finally, be mindful of nanny taxes or household employment taxes which apply
when hiring full-time domestic staff who cost over $2,600 annually. Withholding
taxes should also be taken into consideration as these apply when employing
domestic help in full time positions for which withholding taxes apply (ie: full time
domestic worker making more than $2600 annually).


Background Checks

Before hiring a nanny, both using an outside service or performing it yourself,
background checks must be performed on them. This should include county-level
criminal record searches, sexual offender checks, verification of previous
employment and education verification as applicable, as well as verification of
criminal history records (if applicable) from prior employment history verification (if
applicable) under the Fair Credit Reporting Act – you must also obtain their consent
prior to conducting these searches.
Background checks typically cover education verification and certifications like
CPR/First aid; however, you may wish to request additional details that would benefit
nannies, such as children safety education or experience or training like swimming
Nannies and domestic workers are considered non-exempt employees, which means
they must be paid hourly. Overtime pay (1.5x) applies for hours worked over 40 in
any week – this will increase their hourly rate and must be considered when setting
your budget for hiring one.


Workers’ Compensation Insurance


Workers’ compensation will provide coverage for medical costs and lost wages
should an injury occur on the job, making it critical that families ensure their nanny
has coverage before hiring them.
Nanny taxes must also be paid and vary from state to state. Taxes are an integral
component of payroll and should be factored into the total cost. Some families may
choose to hire an outside service or accountant to manage this process, which may
incur additional expenses.
Families should discuss these additional benefits and costs when interviewing
potential nannies and come up with a plan to pay them accordingly.
Families that choose a live-in nanny should include room and board in the nanny’s
salary to make it easier for her/him to remain on the job even when the kids are off
from school or on extended holiday break. This also allows the nanny more flexibility
when caring for children if school starts again early or breaks are extended.


Health Insurance

Nannies put in hard work caring for the children under their care, and should be
treated with respect in return. That includes providing affordable healthcare and
workers’ comp coverage – offering health insurance is an ideal way to show how
much you value her presence with your family long term!
Families considered household employers can provide their nannies with a tax-free
Health Reimbursement Account (HRA). With an HRA, families can set an allowance
amount and reimburse healthcare expenses up to 2023 contribution rates.
Your nanny may require workers’ compensation insurance, which provides medical
benefits and wage replacement should she become injured on the job. While this
coverage can be costly, shopping around and comparing quotes will likely provide
the best value – services such as PeopleKeep can assist in streamlining this process
for you.


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