By HomePay
What is my cost?
The gross hourly rate for a nanny can vary depending on location, experience, and qualifications.
Once a family pays a nanny $2,700 in a calendar year (for 2024) or $1,000 in a calendar quarter (in most states), they are on the hook for nanny taxes. Between the IRS and state, these taxes make up about 10% of the gross pay.
Nanny taxes can be complicated, but a household payroll provider like HomePay can handle the details and leave families with more time for what really matters. Fees can range from $45 to $90 per month, depending on the location and the level of service offered by the provider. Most providers also have flat fees and the end of each year for annual tax paperwork.
Miscellaneous costs may include state-required insurance policies such as Workers’ Compensation (ranging from $400 – $1,000 per year), optional background checks, and mileage reimbursement if the nanny will use their car on the job.
Are there tax breaks for me as an employer?
Families can leverage tax breaks through Dependent Care Flexible Spending Accounts (FSAs) and Child or Dependent Care Tax Credits. These offer a potential savings of up to $2,000 for families with one child and up to $2,200 for families with multiple children for 2024.
How does my nanny benefit?
Being paid legally offers long-term benefits such as Social Security & Medicare for your nanny’s future retirement.
Proof of income is usually required for loans or leases, which will be covered through pay stubs and W2s. It also provides access to reduced health care costs from subsidies through the Affordable Care act.
If employment ends due to no fault of their own, the nanny will be covered by unemployment benefits.
In some states, the nanny will have access to disability & paid family leave benefits.
Many families offer extra benefits like health insurance stipends, retirement plans, and paid time off to their nannies.
HomePay offers unlimited complimentary consultations for families, nannies and partners to ensure there’s a thorough understanding of the nuances of legal pay. With more than 30 years of award-winning client service and the strongest guarantee in the business, HomePay is the true no-work, no-worry solution.
