How to Pay Your Nanny - dummies

How to Pay Your Nanny

By Chris Pichereau, Abshier House Publishing

Contrary to some beliefs, you cannot just pay your nanny cash or check like you might a babysitter who comes to your home on an occasional basis. Nannies are not independent contractors. Nannies are actually employees of the family. Consequently, it is critical for you to establish yourself as a valid employer.

[Credit: ©]
Credit: ©

Household employers’ legal responsibilities

Before you can pay your nanny, you need to become a legitimate employer. The following are common activities you must do in order to pay your nanny:

  • Complete SS-4 with the Internal Revenue Service (IRS) to secure a Federal Identification Number (FIN).

  • Contact your state employment office to determine whether you are required to report any new hires with them.

  • Determine your state and federal requirements on withholding social security and unemployment tax and find out whether you must retain workers’ compensation.

  • Determine all of the year-end tax forms that must be filed with local, state, and federal agencies.

  • As an employer, you must provide your nanny with a W-2 form by January 31 each year.

  • The Social Security Administration requires that you file a form W-3 form with them by February 28 of each year.

What you can expect to pay your nanny

Depending on your work requirements, the nanny’s experience, and what state or locality you live in, you can expect to pay different rates to your nanny. The 2009 INA Salary and Benefits Survey from the International Nanny Association is an excellent resource for detailed information regarding nannies. A summary of their responses regarding pay and benefits include on average:

  • Nannies who live in their own homes

    • Part-time nannies earn between $7.25–$20 or more per hour.

    • Full-time nannies earn $350-$1,000 or more per week.

    • Full-time nannies working more than 40 hours a week earn 1.5 times the hourly rate for every hour worked over 40.

  • Nannies who live with their families

    • Earn between $300–$1,000 or more each week.

    • Must be paid at least minimum wage for each hour that they work.

    • Are not required to be paid overtime.

    • Have free room and board, which includes private room and bath.

  • Full-time nannies work between 40–60 hours per week with two days off each week.

Nannies are accustomed to receiving the following benefits in addition to their salaries:

  • Use of employer’s car during working hours

  • Health insurance or a percentage of health insurance premiums paid

  • 8–10 paid holidays

  • Two weeks paid vacation

  • Paid sick days

Some nannies also expect to receive the following:

  • Reimbursement for attending professional development conferences and courses

  • To be paid their regular salaries for attending professional development activities

  • Retirement plans

  • Annual bonuses