Employing Your Nanny-Payroll and Tax Information
Updated: Nov 11, 2021
Elite Travel Nannies encourages all families to legally employ domestic staff for many reasons. We assist families in providing payroll and tax resources before the nanny begins employment. This is for the family’s protection but also the caregiver’s protection as well.
Many families think of their nanny as part of the family and will also offer health insurance and other “typical employment” benefits such as paid time off, family medical leave and retirement plans. These measures can only take place when legal employment has been established.
Nannies who are employed without established payroll cannot receive health insurance, retirement benefits or worker’s compensation if they get hurt on the job. They also do not receive Social Security. Their health and their families’ health is not protected as they have no way to cover medical bills or lost wages. They may also find it difficult to secure a loan or establish credit for things like a vehicle, home or higher education.
There are major risks to paying your nanny “under the table”. Besides stating the fact that it is illegal. The IRS can also conduct an investigation into your finances at any time and you could receive major fines or worse for not legally reporting the proper income.
Families find that the benefits they receive by establishing formal employment is well worth setting up a payroll and benefits account for their nanny. Many families take advantage of major tax credits, especially now that there have been more tax credits added due to the Covid pandemic. Some families have reported saving up to $8000 a year by using tax credits and employer FSA by setting up formal employment.
If you need assistance in locating payroll resources or information on tax credits you may be eligible for, ask Elite Travel Nannies. We would be happy to supply resources to establish proper payroll for your caregivers.