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Why you need to pay nanny taxes
NPN Laura posted an article in Articles DirectorySponsored by The Nanny Tax Company You've hired a great nanny and you've agreed on a nanny contract (either with a nanny share family or on your own). You're done now, right? Nope. You still need to tackle one more important thing: nanny taxes. Nanny taxes are employment taxes (social security and Medicare, state and federal income taxes, and state and federal unemployment taxes) owed to the government when you have someone working in your home. Though the term “nanny” is in the name, it’s important to note that nanny taxes are NOT just for nannies! Anytime you hire someone to work in your home, whether a babysitter, home health aide, housekeeper, etc., the government views you as an employer, making you responsible for employment taxes. Though there is a misconception that these employees can be categorized as “independent contractors,” misclassifying a household employee as an independent contractor can lead to a charge of tax evasion. Wondering why household help can’t be classified as an independent contractor? Because per the IRS, a person is an employee when you tell them what they will do and how they will do it, as opposed to an independent contractor that you tell only what results you’re looking for. For example, you would consider a landscaper an independent contractor. You tell the landscaper what you want done — they’re responsible for ensuring that it gets done and they’re free to sell their services to everyone in town. A nanny, on the other hand, works in your home at the hours you set, and cannot sell their services to others while working for you. While many families think they can “fly under the radar” of nanny taxes, keep in mind there are ways the government might catch on. Although you may not get audited by the IRS, if you fire your employee they could try to claim unemployment benefits. Or, your employee might file for social security benefits and there is no record of her employment with you. Plus, paying your nanny legally gives you the added benefit of knowing your employee is receiving fair and legal wages, has the employment paper trail that will allow him or her to purchase a car or home, and will be able to collect social security when they are older. Everyone benefits from paying their nanny taxes: families and employees alike! While the complex requirements of nanny taxes can sound a little confusing (and scary!), there is help available. Start by reading IRS Publication 926 to learn about the federal component of nanny taxes. Then check out the Illinois Department of Employment Security (IDES) and the Illinois Department of Revenue websites for information on reporting household employer taxes. Lastly, check the Social Security Administration website regarding filing the employee’s W-2 forms each year. The Nanny Tax Company is a family and woman-owned company with over 25 years of experience handling nanny taxes. We know the ins and outs of nanny taxes and are readily available to answer your questions via phone and email. The Nanny Tax Company can be reached at (847) 696-7260, or https://www.nannytaxprep.com.
Nanny shares 101
NPN Lauren posted an article in Articles DirectoryA nanny share seems like the best of both worlds: Your little one gets daily socialization with another child like they would in daycare, but you still get the benefits of having a dedicated caregiver while (importantly) splitting the cost with another family. All of that is pretty much true. But a nanny share also requires a delicate arrangement between two busy families and one nanny, and it can get complicated, especially in the age of COVID. Having just finished a successful nearly two-year nanny share, I feel qualified to offer this guide to starting a nanny share, along with some tips from fellow NPN members. What comes first, the family or the nanny? That’s a matter of personal preference and circumstance, but I think finding the family first makes sense. That way, both families can search for and interview the nanny and come to an agreement. Which leads me to… Finding a family The prevailing wisdom is to start looking for a nanny at least one month before you need one to start, so if you’re finding a family first, give yourself at least a month before that. That means that if you’re taking the standard three-month maternity leave, you basically need to start looking for a family while you’re preparing your birth plan. An exaggeration, but…not really? Connecting with families who are pregnant and similarly far along (NPN is a great source for this!), isn’t a bad idea. [Related: How to find a nanny] But assuming you have your baby already, use the time you are mindlessly scrolling on your phone while rocking that little rascal to sleep to search or post on sites about sharing a nanny. Options include NPN’s Childcare Classifieds, of course, as well as neighborhood parent Facebook groups, neighborhood association email lists, and sites like Nanny Lane. What should you look for in a family? That depends on what’s important to you as a parent, but here are some things to consider: How they feel about vaccines for themselves and their baby (a thorny but important subject these days) Age of kids (it’s really helpful if both kids are roughly the same age) Proximity (easiest if the family is close to you or your office) Hours needed Start date — and end date, if they know it More nuanced issues to talk about with a potential family: parenting philosophy and discipline preferences. If you don’t discuss this, as one NPN member says, “the nanny ends up having to navigate why Brynnleigh gets fruit gummies and timeouts but Xyaedan can only snack on dried kale and must be rocked to sleep.” Not necessarily deal-breakers but important to agree on before the nanny share starts: What to do when one of the kids is sick Where you want the childcare to happen (your house, their house, a split of both?) Aligning nap schedules (recommended!) Whether the host family provides food or if you need to pack food for each day Kid equipment you’ll need — such as a double stroller, crib or pack ‘n’ play, high chair, diapers, dishware and bottles — and how you will split the cost COVID complications Like most things in our lives these days, COVID makes navigating nanny shares more complicated. The importance of being in agreement with the other family and with your nanny on safety protocols, masks, and all things pandemic-related cannot be overstated. This NPN member summed up well all the factors to consider: “…Clear communication on illnesses and behavior, both COVID and non-COVID illness … as well as expected behavior/testing for known exposures and feelings on masks indoors in public. When we visit the museum, are both families on the same page as well as the nanny? Also, will you follow the 24-hour fever-free rule schools use or the 72-hour fever free that is actually recommended by pediatricians? Or do you split the difference and do 48 hours? … And what is the plan if nanny is sick? Does each household rotate responsibility for the whole share or is each person responsible for their own kid(s)?” Whew. It’s a lot. All the more reason to hash out these issues ahead of time to avoid conflict in the future. [Related: What to ask in a nanny interview] All about the Benjamins Now down to the nitty gritty. You need to agree on the salary you’ll offer the nanny, which is typically the market rate plus 33%. The nanny will be watching two kids at once, after all. A nanny contract is essential. In it, you’ll lay out how and when the nanny is paid; vacation, sick days and holidays; bonuses and raises; and when and how any of the parties can end the agreement. (Read a more in-depth guide to nanny contracts.) Each family should employ the nanny separately and each give her a W2. The pay rate and the contract will be finalized once you’ve found your nanny and they weigh in on what’s important to them. Finding a nanny Together, you’ll find the nanny of your dreams. There are many ways to go about it: NPN’s Childcare Classifieds, nanny agencies, word of mouth, and sites like Care.com are just a few. But first, discuss with the other family what you’re looking for in a nanny. Do you need the nanny to be able to drive and have a car? Would you prefer a nanny who speaks another language and would be willing to teach it to your kids? Do you expect the nanny to do household chores and food prep? Beyond these qualifications, talk about the personality that would fit best with both families. Do you want a nanny who has that calm, warm, grandparent-y vibe, or would a nanny who has boundless energy and tons of silly ideas for fun activities work best for both kids? There are countless things to consider when interviewing a nanny, checking references, extending an offer and maintaining a strong relationship. This article, How to find a nanny, succinctly covers it all. Just like you would at your 9-5, you might want to have a quarterly check-in with the other family and your nanny. This helps make sure you are all aligned and communicating any issues or concerns. The relationship you have with your nanny and nanny share family is one of the most important in your young child’s life. When a nanny share works well for all parties, it’s truly wonderful. I was very sad when our nanny share family moved to the suburbs, but I will always be grateful for the time our families and our nanny spent sharing the work of raising two small humans.
How to write a nanny contract, and why you need one
NPN Lauren posted an article in Articles DirectoryWhy is it that when most of us hear the word “contract” we cringe? A contract is simply an agreement, pact, or understanding. It's used in many areas of life and business, and simply put, it can be a useful playbook to help guide us toward success. Full disclosure: I am not a lawyer, and I don’t know all of the ins and outs of contracts. Yet, I am a firm believer that when we set up proper expectations with those whom we choose to intermingle, we are sharing love. Many of our fumbles or disagreements could be prevented if we would have simply looked ahead and examined, “What do I want?” and actually shared this with the other person or party ahead of time. Contracts do just this. And when it comes to our children, we all know what we want. We simply need to put some thought into this so that everyone — us parents, our children, and our caregivers — are set up for a favorable outcome. [Related: What to ask in a nanny interview] Now, on the flip side, contracts are a step to support and protect our nannies as well. Imagine accepting a job without knowing when you are supposed to show up for work, how long you are supposed to work, how or what you are even supposed to do for work, when you get paid, how you get paid, how much you get paid…this list goes on and on. This isn’t a firm foundation for a trusting relationship. There is no indication of safety and security, which are core feelings that we all need to live happy and healthy lives. The City of Chicago recently announced that a written contract is needed to protect all nannies (and other domestic workers). I think this is a step in the right direction to help us all sharpen our communication skills and to come to a mutual agreement on how we want to create this transaction between us parents and our nannies for caring for our children. A good nanny contract may consist of the following: Your Family Philosophy: Share your values, activities, styles of learning, and the ways you want to interact and respond to the child(ren). Job Responsibilities: This may include feeding and dressing standards, schedules and routines, activities and recreation, and any other household maintenance that you expect from your nanny (like cleaning up after the children). You may also want to include what this job does not include so your nanny can feel comfort in knowing what she doesn’t have to do while on this job. Terms and Conditions: Be sure to include the start date, days, and hours along with total time expected each week, any outside of normal hours conditions, and location(s). Pay and Earnings: Include how much will they earn, how and when they will get paid, formalities on how to communicate if/when the nanny will be late or absent, and any penalties associated in these instances. Finally, include whether your nanny is responsible for filing her own taxes. [Related: 5 tax breaks every parent should know about] Time Off: Define sick and vacation time and how much of each is included, how and when to notify for PTO, and list any other holidays or additional days that are considered PTO or non-PTO. Termination or Exit: One of the most powerful pieces in any contract is articulating how it would look like to end the relationship. Put some time into this part and list out how each party may terminate the agreement and those conditions. Signatures: When everyone reads and agrees to this agreement, memorialize this with your stamp of approval, aka your signature. (Pro tip: Google “nanny contract” and get free or cheap templates to guide you along.) Ultimately and hopefully, you can use your agreement as a document to help facilitate healthy communication and avoid unhealthy conflict. When I’m advising my clients on their businesses, I always remind them that we need to plan to plan. And if our goal is to build a happy and healthy relationship between us, our children and their nanny, we need to plan this out. Do yourself a favor and take this time to create a contract and thoughtfully share this with your nanny. Talk about it. Have them ask questions and give them the option to add or edit. Not only that, but this agreement can be leveraged to help serve as a mission statement for your family that you will come back to over time, and serve as a reminder for how you envision your family to thrive.
What to ask in a nanny interview
Guest posted an article in Articles DirectoryThere is a lot to consider when hiring a nanny. Interviewing, screening and selecting potential nanny candidates can be a daunting task, but it is an important part of finding a nanny that is a good fit with your family. Try to use open-ended questions that will prompt for informative answers, such as questions starting with: What? When? Why? How? Where? Or tell me about… This will avoid getting yes and no answers. Experience and background: Look for a nanny who has experience working in a position similar to what you are hiring them for. Finding someone who has experience working with multiple families will ensure they are familiar with adjusting to the needs of your family. Ask for a resume and have them include at least three family references. Sample questions should include: Tell me about your educational background. Do you have any formal early childhood development or childcare training? How long have you been a nanny? 2. Nanny and philosophy/approach: Make sure a nanny’s philosophy about childcare is in line with yours. Discipline is an area that needs to be discussed up front to avoid any differences of opinion on how children should be disciplined. You need to know your candidate is in the field for all the right reasons, and enjoys children. Important questions to ask are: Why did you choose a nanny career? Why do you like being a nanny? What do you think are the qualities needed to be a good nanny? 3. Your requirements: Make sure the nanny’s approach to work lines up with your own requirements. Your ideal candidate should be someone who has similar values, goals and work ethic to your own. Key questions should include: Are you familiar with the neighborhood? What is your philosophy on food and snacks? What is your flexibility with scheduling? 4. Additional considerations: Give the candidates some time to spend with your child in home. We also suggest families schedule a working interview with finalist candidates. Are they attentive? Do they keep your children engaged? Your observations matter a great deal when you finally make decision. A few good questions are: Are they comfortable holding and/or speaking to your child? Was the nanny pleasant and have a positive and upbeat personality? Are you able to communicate easily and effectively with each other? Doing your homework and asking questions that are important to you and your family will make selecting the nanny that much easier. If you allow these questions to guide your interview process, you will find a great match in no time at all.
5 rules for traveling with caregivers and kids
Guest posted an article in Articles DirectoryI must admit: I never thought I would travel with childcare. That was a luxury that never entered my mind until we hosted our first au pair over four years ago. One of the premises of the au pair program is the cultural exchange between the family and au pair so it was a natural fit to let her explore the USA with us. Now, having taken more trips with our au pairs over the years than I can count, I must say it is a huge relief to have an extra set of hands around while navigating the stress of travel with young children. This doesn’t necessarily mean you are sipping margaritas at the beach solo, and it does take preparation to be executed well. We found having our au pair with us allowed us to do special activities with each of our children, while not being confined to nap schedules as our au pair could stay with the nappers. Squeezing in a few date nights is a perk, too! Here are my best practices for travel with caregivers: Set a schedule Explain your plan for the trip as well as the daily schedule while on vacation. Be specific about your caregiver’s schedule and hours expected to work. Let her know of any days off or downtime, and when that will be (and stick to it!). Sort out sleeping arrangements Will your caregiver be sharing a room or bathroom with your children? If so, are they expected to wake up with the children in the middle of the night or morning? Will they have their own space where they can go at the end of the day? Whichever you choose, make sure they understand the rooming situation and responsibilities. Define responsibilities Discuss your expectations for childcare as well as other chores that will need to be done on vacation. Will they only be responsible for playing with and watching the children? Are they also responsible for laundry, meal preparation, clean up, driving? If they will be in charge of the children near water, find out their water safety knowledge and comfort level with children in water. Clarify payment Define what compensation they will receive for their time. It is expected that the family pay for the travel and accommodation costs for the sitter. In addition to those expenses, what rate will the sitter receive? Is it an hourly rate while she is “on duty” or will it be a flat rate for the entire vacation? Communicate In addition to communicating all of the above expectations before departing, it is important to continue to have open communication while on the trip. Have daily check-ins to go over the schedule for the day and rest of the week. Communicate how they can be most helpful during their hours and what you would like them to prioritize in terms of responsibilities. Most important, tell them how much you appreciate them and point out what they are doing well! Following these guidelines will alleviate much of the stress of traveling with children and allow you to enjoy your vacation time together. Happy travels!