Written by Brooke Strickland for Nannies Plus
If you plan to hire a nanny or family assistant who you will pay more than $2,400 this calendar year, it is important to remember that you are considered a household employer and are required to pay your household employee legally.
Legal pay means paying Medicare and Social Security taxes, federal unemployment tax, and state unemployment and disability insurance taxes.
Many people hiring a nanny or family assistant misunderstand their role as a household employer and classify their nanny or family assistant as an independent contractor, rather than an employee. To determine if you are a household employer, ask yourself the following questions:
- Do you control what hours your nanny or family assistant works?
- Do you designate their specific job duties?
- Do you determine where they do the work?
If you answered yes to these questions, then you are an employer and your nanny or family assistant is an employee in the eyes of the law. Independent contractors, on the other hand, pay their own taxes, and can be selective about their job duties and where they work, complete their job duties on their own schedule, or even send a contractor in their place if they’d like.
If you pay your employee ‘under the table’ and ignore the employee versus independent contractor rules, you could face big fines or penalties from the IRS. To stay within compliance, have your employee fill out a W-4 form for tax and wage reporting. Then, talk to a household payroll and tax company to figure out how to properly withhold taxes. Nannies Plus partners exclusively with HomeWork Solutions to help family teams ensure their nannies and family assistants are paid accurately, with all taxes withheld and filed in a timely manner.
If you live in Marin, San Francisco, the East Bay, or Sonoma County and you are considering hiring a nanny or family assistant, we understand that there is a lot to learn. It can feel overwhelming to figure out all the inner-workings of payroll and tax laws for your new employee. Contact us today to learn more about adding a vetted childcare professional to your family team, and to learn what it takes to get them set up to be paid legally.