How to approach Nanny Taxes?

I will be seeking a new job in a few months and want to be "on the books". I have only nannied while in college and was seeking part time jobs and was shocked at how much aversion the families I met had to paying taxes. During one particular search I interviewed with THREE families that seemed like good fits. The first two ended the interview and said they "could not afford" to pay taxes. One tried to convince me I didn't need to pay taxes. The other reacted as if I just told them I'd have their toddler drive the family car. The third family also had an excuse but by then I was without work for so long and just so worn out that I just accepted.

How many of you parents and nannies with full time arrangements pay taxes? How and when do I bring this up in a professional manner? Is there anything I should watch out for (besides being suckered into being an "independent contractor")?

Thanks everyone


MissMannah said...

I'll admit it, I've accepted an independent contractor job before but that was because I was desperate for money. You don't want to accept a job with these kinds of people for long-term because not only will you end up paying a lot of money in taxes, but also any family that doesn't want to pay their fair share is probably going to be shady.

As a full-time nanny, you are considered a household employee and your nanny family is your employer, and thus they are required to pay employer taxes and their share of Medicare/SS. They are not required to pay your state/federal but it is customary to expect your employer to withhold taxes and pay them for you, either monthly or quarterly. Make sure you get all this in writing before accepting any job! One thing I like to remind parents of is that if they don't pay proper taxes, they will not be eligible for the childcare tax credit. Also, you can help them out a bit by researching payroll programs, I've never used one but they are supposed to be very helpful and user-friendly.

Good luck and I'm glad you're trying to do the right thing!

CleaverJune said...

I know it is difficult, but stick to your guns. Over the years it has gotten much easier to state with confidence that I expect to be paid legally. I have learned that when the topic comes up I need to be polite but firm. I state that as I am a professional and this is what I do as a career, not just a moonlighting job, I need to make sure that I am acting professionally.
I let people know that a legally paid position is important for more than just not maintaining a level of professionalism, it entitles parents to legal recourses that may not be afforded to them should anything go wrong.

As someone who does this as a career, it is important to me to have verifiable income for more than just tax purposes. What happens if I need to get a new car and have to apply for a car loan? What happens if I want to buy a home? I need to have verifiable income, pay stubs, and/or W-2's?

Over the years I have learned that there are many reasons that parents don't want to pay legally. some parents can be extremely cheap and don't want the responsibility of some of the taxes. Sme don't want to be responsible for dealing with an Unemployment Insurance claim. Some just don't look at people who are nannies as professionals who deserve to be treated respectfully because they deem domestic work to be beneath them. Lastly, one of the biggest things I have come across is that it can be down right scary for people who have no idea how to go about it.

Lots of parents are not and have never been business owners. Many have no idea how to even go about payroll and find it a bit intimidating. Many people are unaware how to do it themselves or that they can affordable use a nanny payroll service.

Regardless, I am a professional and I expect to be treated professionally. I take my profession seriously and expect to be paid for my work legally - just as any other college educated professional with over a dozen years in my chosen profession.

Sometimes it's hard to find parents that will pay legally. Just remember that even If they seem like a perfect fit EXCEPT for this one issue ... Reality is they are not a good fit for you. if you need to be paid legally and they don't want to... Don't settle. You may decide to try to compromise and have a brief trial period before they start on the books, or something else entirely. Whatever you do, just remember that you have the RIGHT to be paid legally.

Expecting someone you work for to follow the laws regarding you is not you asking for to much. Do what you need to do. Be strong, be firm, and know that there are people willing to pay legally. They may be harder to find but just imagine what would happen if suddenly all of the people who work as nannies actually demanded to be paid according to the law. Imagine what would happen if when you have a position with job creep you had legal recourse. Wouldn't it be great if you had the law on your side when you work an 80 hour week and they just don't "feel," like they should pay overtime because last week you only worked 30 hours? Imagine what would happen if when your employers let you go due to financial reasons, you weren't left screwed - and could actually get the unemployment that you deserve until you find that next family.
All of these problems could be helped greatly.... If only we were paid legally.

As I said earlier, before I went off on this tangent (sorry about that by the way.) stick to your guns. If you need to be paid legally don't settle for less. And if you are still not finding what you need, maybe try an agency... They pay legally. :)

CleaverJune said...

Oh wow.... So sorry for the grammatical errors.
I tried to click on preview post to read and edit it and accidentally posted it instead.

Regardless, I hope the message gets across to you the same.

Nanny law student said...

Just so you know, you cannot be an independent contractor and 1099'd at the end of the year. So when you said you arent going to get suckered into that... good for you.

Because of the way the law is structured, no domestic employee can be considered an independent contractor. You can have your own business and the people employed by you can be independent contractors, but NOT people working directly for the family. Those laws were created specifically to protect domestic employees like maids, housekeepers, nannies, drivers, and butlers.

Nay The Nanny said...

It is definitely more difficult to find a family willing to pay a fair salary on the books, no doubt it will take you longer, but it isn't impossible. You should bring it up at the very beginning, before even meeting...I put it in every application I sent out. I mentioned my salary request (ballpark) and stated that this was my rate after taxes were taken out. Some families wanted to just pay me in cash (I do realize I could be bringing home more if I did it that way) but at the end of the day I really do think if nannying is going to be my full time job it should be on the books so I stood my ground until I found an awesome family willing to do it the legal way. (DB works for the government anyway so they would be doing things the legal way for sure.) They can claim the childcare credit, I get a tax refund, can fule for unemployment should I ever need to, and have money going towards my retirement one win. :)

nenanny said...

As others have said stick to it.

I have in the past worked off the books because I was desperate, but it ended up being more trouble than it was worth.

It's a little easier for me know because my profile with agencies and on care sites states I require to be paid on the books.

I typically discuss this during the interview after I've charmed the parents and the kids and sold myself as the nanny they can't do without. I do the payroll research and show how little extra they are actually paying, great companies that will do the work for them, and the benefit to them ( child care credit) . It's also clear it's not negotiable, so you have to be willing to walk away.

Good luck to you.

A Nanny said...

I tell families, that I can only accept employment with families who are paying ON the books,
since I am a professional career nanny and therefore, follow all the laws pertaining to nannies/”household employees”.

When I attend an interview, I can't go into the interview and tell a family what a professional nanny is and does, tell them what I can bring to their family, show my certificates and skills, request a professional level salary and then turn around and say
"I want to be paid OFF the books only."

IMO...anyone working as a "nanny" can't claim to be a professional in one breath, and ask for their salary under the table in the next. I feel when a nanny does this it sends a clear message to the employer that they are not quite as good as they say they are, and knock themselves down on the professional ladder. So, they are just a “babysitter” and have something to hide by not doing things legally, and that they don’t mind breaking the law, all of which do not make a good first impression when beginning an employee/employer relationship.

I am aware that many nannies and families in the area prefer to do things "under the table" and many feel that it is complicated to do all the “paper-work”. Each of my past employers have all have paid me legally thru a nanny payroll service and have rec'd tax breaks for doing so.

Newbee Mama said...

Interesting.. I'm a new parent and recently hired a PT nanny. It took me a good 3 weeks to find someone that would be okay with getting paid over the table. Most nannies I talked to sounded like they're used to being paid under the table and didn't like the fact that we'll be paying legally, as if they lose money or something because they're being "taxed". We're actually spending more than what we tell them their hourly rate is because we'd have to pay for half of their SS and medicare, but for some reason the nannies I talked to didn't seem to have any idea...

♥ Amy Darling ♥ said...

If you want to find a family who pays on the books, why not try an agency?

In my area, all of the agencies make sure families pay legally.

nenanny said...

In my opinion 3 weeks is a good amount of time to search for a nanny. You can never be too careful.
Many nannies do work under the table that is a fact.

I am sympathetic to them in many cases. I can understand why a nanny working for $12/hr would not want taxes taken out.

I am not accusing you. I am speaking in general terms.

I have also had potential employers try to manipulate me out of salary requirements by mentioning the costs they have to pay. I'm not very sympathetic to that, having a fulltime private employee is going to cost you money. If you cannot afford to compensate your nanny fairly without breaking your budget look into other means of childcare.