There are many considerations when calculating your wages. Your family needs to know the total cost of hiring a nanny. You want to know how much money you’ll be taking home at the end of the week. Here are some things to remember when negotiating your pay.
It is extremely important that from the beginning, all discussions about wages between you and a potential household employer clearly state whether the pay will be gross or net wages. Net pay is the amount in your paycheck after taxes – such as income tax, Medicare, and Social Security – are taken out. Gross pay is your take-home pay plus the taxes that will be withheld. Make sure you and your family are clear about gross and net pay to avoid any confusion come payday.
The going rates for nannies vary from city to city. Even going from a metropolitan area to its suburbs can see a big change in pay for caregivers. It’s important to know what nannies get paid in your city or town. A good resource is the International Nanny Association (INA)’s Nanny Salary and Benefits Survey, and you can also check Indeed or Payscale to get a general idea of nanny pay rates in your area.
Nannies are required by law to be paid an hourly rate and not a flat salary. Nannies are also required by law to be paid at least time and a half for hours worked over 40 in a workweek. If you’re being offered $20/hour for 50 hours/week, that’s $20/hour for the first 40 hours and $30/hour for the additional ten
hours.
If you earn more than $2,300 in 2021 from one family during the year, your employer must withhold Social Security and Medicare taxes at 6.2 percent and Medicare at 1.45 percent of your gross pay. The amount of federal and state income tax withheld from your paycheck depends on your marital status
and how many allowances you choose to claim on your W-4 form.
If you earn less than $2,300 in 2021 from any family, even though your employer is not obligated to withhold taxes, you will still have to file an annual income tax return and report any wages earned during the year. Keep an accurate record of your earnings; this will help you pay both federal and state income taxes for the calendar year when you file your tax returns.
Your hourly rate, overtime rate, paid time off, and other wage and benefit details should be clearly stated in writing so there’s no confusion come payday.
To get a good estimate of what your take-home pay will be, use our nanny tax calculator so both you and your family are on the same page regarding your wages.
Since 1991, GTM Payroll Services has been working with nanny agencies and their families to give them the best value when it comes to payroll and taxes. Our process improvements and efficiencies have kept costs down, and we are committed to keeping our clients ecstatic. In addition, GTM is the only household payroll provider that offers in-house workers’ compensation. This saves families time and effort in securing coverage and handling audits and claims.
If you’re a nanny that knows a family that could use GTM’s nanny tax and payroll service, send them our way. If they sign up with us, you’ll get a $75 Amazon gift card! Just fill out this form.
Visit us at GTM.com/household, or call (800) 929-9213 to learn more about our nanny payroll and tax services.