I just interviewed a dozen nannies for our position which we advertised at salary DOE. I was prepared to pay about 900 per week. I was prepared to pay our portion of SS and taxes. I called my first pick and offered her the job. I offered her the salary of $900. She acted enthusiastic on the phone and said she would need to call me back because she was enroute to another interview. She emailed me later and said she would love to work for our family but she needed to net $900. A few nannies made it clear they needed to NET a certain amount. Some of these amounts were less than $900 but the nannies weren't among my top choices. I went with my second choice who had the highest salary requirement of $1,000 per week. (She would pay her share of the taxes). She also asked for health insurance after three months of service. I don't feel like I have any control of this situation!
My nanny brought us a letter from her tax preparer saying she needed to be legally employed on the books effective immediately. And that she would need the entire year of 2013 on the books. Right now, we pay her $600 cash off the books. We are not wealthy people. Having to pay taxes on this salary would really mean we cannot pay her the full $600. How do address this without losing our nanny?
Last year, we paid our nanny on the books and "grossed up" her salary. She was given a $480 tax refund (based of what we paid in for her). She put the check in an envelope with a note saying, "I don't think it would be fair for me to keep this". We have a great nanny, we don't want to lose her. We let her keep it, right?
The last survey I saw said that 85% of employers do not pay their nannies on the books. Let's say $700-$900 is the salary range in your area. Employers need to understand that those numbers are based on off the books salaries. You may hear that $700 is a fair rate for a new nanny, but that is based on her taking home $700. If you offer $700 on the books, you are in effect offering below the going rate. You need to offer an amount that will give the nanny around $700 after taxes. And when we talk about employers paying the nanny tax, that is the employer's share of S.S. , etc., not the nanny's share.
ReplyDeleteEmployers, please pay your nanny on the books so that both you and your nanny are on the right side of the law!
I agree Manhattan. Any other job is required to withhold taxes, why do people think they don't need to take the taxes out.
ReplyDeleteHigh end nannies cots high end money.
ReplyDeleteI don't know any nannies that expect the employer to pay her taxes.
I do know many s that expect their employers to pay legally and fairly including paying their share of taxes.
Most experienced nannies are able to set their gross rate knowing what they will take home.
Their are plenty of online calculators to help figure it out.
It seems to me you will be able having to keep your current nanny on the books and having her net the $600 by staying within the $900 dollar gross salary you had initially budgeted.
Check out
Breedlove
4nannytaxes
http://www.irs.gov/publications/p926/ix01.html
To help you figure out your expenses.
Good luck to you!
It goes both ways, you know. I have interviewed with many families who tell me how they "can't afford" to pay taxes and therefore are only offering to employ me illegally.
ReplyDeleteOffer your nanny what is legal and what you budgeted for. You say you don't feel like you have control over the situation. You're the employer. Offer what you can afford and know your bottom line. I think it makes a situation more professional to negotiate salary and benefits that works for both parties rather than saying "We pay $X", but that's just my opinion. I personally don't think that health insurance after three months of employment is that outrageous, but again, that is just my opinion and experience.
If you're advertising a position, advertise it as either net or gross as to be clear about what you're offering. I think a lot of the miscommunication here comes from the fact that the bottom line for families is the gross pay and nannies think in terms of net pay. In the negotiation process I always speak in terms of gross pay while actively calculating what my net take home will be and how I can realistically budget.
Honestly, I have never heard of a nanny or other domestic employee asking a family to pay all of her share of taxes. I have, however, heard of many nannies being forced to claim Independent Contractor on their taxes, but I guess our experiences are just different.
Sounds like by speaking in terms of net or gross take home pay with your new potential nanny you could eliminate a lot of miscommunication. It also sounds like you offered the nanny the job but in the end you two weren't a good fit because of salary requirements.
As for your nanny who gave you her tax return, I think that really speaks to her character and integrity. Sounds like you found yourself a good one. You don't necessarily have to let her keep it. If I intended to give a family the taxes back, I would not be expecting them to offer it to me. If you really want to "give it back" to her, you could give her a large Christmas and/or birthday bonus this year.
Navigating the nanny/employer relationship really is hard, OP, but if you stick with it, know your bottom line and what you are and aren't willing to compromise on, you will be able to find a nanny that's a good fit for your family and your budget.
I'm a bit confused about which nanny you went with.
ReplyDeleteI do not know the hours or duties you are asking your nanny to perform or the going rate in your area for the type of nanny you want.
Anyways,
You said you would have been willing to offer $900 gross? I think that should net about $600 a week.
I'm basing that off my own salary agreement.
Now if she wants more than that that is another discussion.
If you think you're going to keep a full time nanny that you love using $600 as a gross figure you'll most likely be out of luck.
I don't think wanting health insurance is off the wall to request or at least some contribution to it. I don't have it with my current job, but have in the past.
Usually I was given the choice netting $XXX a week or netting slightly less a week and the difference applied to health insurance.
Bonuses are up to you. They are nice and appreciated but I don't expect or demand them.
Also you do have a say, salary and contract negotiations should have input from both you the employer and your nanny.
I am almost 100% sure that if an employer "grosses up" the nanny's taxes for her by paying all the federal/state/local income taxes, that the nanny then must claim that money as additional income.
ReplyDeleteOP, in the future, tell nannies when screening them over the phone that you will not "gross up" their wages, and you need them to use a wage calculator such as the one found at 4nannytaxes.com, aka homeworksolutions.com to determine their GROSS wage requirements.
You might also use those calculators to determine what the gross wage for a nanny asking to net certain varied amounts per week would be, so that you can then say, "Nanny, I am willing to pay you $XXX GROSS, which, depending on your withholding, will net you around $YYY take home per week.
Just don't play the game, in other words. As an employer who is going to withhold taxes and pay legally, you can advertise that fact and a lot of the tax cheat nannies won't even bother to respond.
I'm extremely curious how nannies circumvent the system. How does someone with, presumably a car, rent and other large bills file taxes every year and claim no income without getting audited?
ReplyDeleteAnonymous,
ReplyDeleteyou work a a crappy pt job on your days off for a few months every year. you don't deposit all your cash into the same account, you don't accept checks. You basically need to have credit cards, car etc before you accept a job off the books. You can find apt with roommates or through homeowners who don't request proof of income. otherwise you have a cosigner for everything, get married or claim your parents support you.
If your a full time college student its easier.
That really sucks. I wonder how parents and nannies maintain a professional and respectful relationship while the nanny is being forced to jump through all of these hoops to hide her income. This is hands down, the single thing I hate the most about this profession--the fact that finding employers willing to pay legally is considered a luxury.
ReplyDeleteI would love to earn that kind of pay!
ReplyDeleteI think I am going to submit my story to your blog as a follow up to this. But here is my basic response. I interview for a position and every person I interview for wants to hire me. Just like any position, I can ask for whatever I want and I can choose the position that provides the best pay and benefits.
ReplyDeletePlease do, Andrea! I am also seeking a new job to start in a few months and I'll write up something about my experience with the interviews and negotiation process.
ReplyDelete