Nanny Pay & Taxes

At The Elite Nanny Team, the parents pay the nanny directly, usually using an online direct deposit system, and handle all nanny taxes. We highly recommend HomePay by Breedlove.

Please know that the minimum nanny pay we extend to our nannies on your behalf is $20.00 an hour.

While your nanny may work a consistent shift, and his or her pay may not fluctuate greatly, we suggest using a time-tracking app.

The number one reason nannies quit is that they feel they are being taken advantage of (regardless of whether it occurs).

The easiest way to eliminate friction is two-step:

First, pay your nanny by the hour and not on a salary.

Second, utilize a time card app your nanny can use to track her hours. Using a time-tracking app greatly ensures complete transparency about hours worked and nanny pay.

Many available apps recognize when the employee arrives at the home address (also known as work) and initiate a timestamp. Additionally, your nanny can email you a CSV documenting their hours.

We highly recommend HoursTracker, which is free on Android and iPhone. We aim to establish a lasting relationship based on trust and open communication.

While we offer suggestions, as the employer, all final decisions are yours.

It is our goal to minimize unneeded tensions. Additionally, you are welcome to compensate your household employee in cash, check, or direct deposit.

Are you wondering what Nanny Services we offer?

Nanny Taxes

A percentage of childcare may be tax-deductible so long as your children are under 13 years old. (Publication 503), depending on the current policy. The Dependent Care Tax Credit is available up to a total of $5,000.00 (subject to change)

The IRS defines a Household Employee as follows:

“The worker is your employee if you can control not only what work is done but how it is done. If the worker is your employee, it doesn't matter whether the work is full time or part time or that you hired the worker through an agency or from a list provided by an agency or association. It also doesn't matter whether you pay the worker on an hourly, daily, or weekly basis, or by the job.” - IRS.gov

Your nanny will need a caregiver’s taxpayer identification number.

As the employer, you are responsible for state and federal nanny taxes. Typically, a W-4 is issued to the nanny. You will be encouraged to follow accurate accounting by deducting taxes from your employee’s pay at the end of each week.

Most of our clients own businesses, so their accountant handles the taxes. Families who don't use an accountant use a payroll system that manages all of the nanny taxes for you (except for fiscal-year-end itemization.)

Because your contract establishes a guaranteed number of hours, this calculation and fee rarely differ weekly. So, if you prefer to manage your private household employee's taxes personally, that is up to you.

Kindly note that the employer is accountable for paying nanny taxes ON BEHALF OF the nanny/babysitter.

Filing nanny taxes is important and may allow you to benefit from the childcare tax deduction.

Filing Nanny Taxes

Here’s the paperwork you’ll need for your employee and the IRS:

• Form I-9: This is used for verifying your worker's identity and employment authorization. Your employee will need to provide documentation to prove their identity.

• Form W-4: A withholding allowance certificate you’ll need from your employee if you withhold federal income taxes.

• Schedule H: You’ll complete this form with your 1040 when you file your taxes. This will spell out how much you paid your employee(s) and the applicable unemployment, Social Security, and Medicare taxes paid.