Gift for Mom? Check. Gift for sister? Check. Gift for employees? Just cut some checks. Gift for the nanny, dog walker and housekeeper? Hmmm…that can be trickier.
As you give out bonuses or gifts to your employees this holiday season, don’t forget your household staff! As our lives becoming increasingly busy, with demands at work, personal matters and consumption of the endless amounts of data coming our way in 2016, you want to take time to thank those helping to keep the homestead running.
First and foremost, make sure that you verbally thank everyone for a job well done (hopefully this is the case). Verbal praise is always appreciated, and often not given enough.
Regarding what to give, it seems that most household staff appreciates cash or gift cards at a store you’re certain they frequent. These gifts allow your helper to pick out what they really want or really need, and as the economy has picked up maybe you’ll be in a position to give something more personal, depending on the person.
That said, you have an idea of what your staff likes, and you are probably aware of their financial situation, so go with your instincts and have some fun! (Check out this Pinterest post on Top Gifts for your Nanny this Holiday Season, which include a gorgeous cashmere wrap and fun personalized mason jar mugs.)
Regarding who to tip and what to give, we have some helpful ideas:
When tipping your nanny, the usual amount is one or two week’s salary – more often two weeks when you have worked with the nanny for several years or more. For newer nannies, many families calculate one day’s pay for each month of employment, using their best judgment.
The size of your nanny’s bonus also can depend on your family’s financial status. Some working parents can only afford a half-week’s pay, while others may give their nanny two weeks’ or more. You just want to make sure you are consistent. If your nanny has grown accustomed to receiving a certain bonus, it could cause confusion or even resentment if you cut corners one year.
Need help with nanny payroll? Learn how to avoid IRS fines.
If you are tipping your house cleaner, the standard amount is to double their usual payment. So, for instance, if your house cleaner charges you $100 per cleaning, you would give him/her a $100 tip in addition to the $100 for cleaning that day, so you would give $200 before the holidays.
Similar to the house cleaner, the norm is to double what you pay the dog walker each week. So, for instance, if your dog is walked once a day for $50 a week, you might want to give the walker $50 in addition to their regular fee, or $100.
It also is a nice gesture to give your staff a card along with the cash or gift. Be sure to sign everyone in the house’s name. Another special touch could be to include a small gift such as a tin of homemade cookies, cupcakes from a local bakery or an ornament.
Now you feel set with what you’re going to get your household staff. Don’t forget about the tax implications. “Wages” are defined by the IRS as all remuneration paid. Under IRS rules for 2013, if a household worker earns $2,000 or more in a calendar year, the employer is required to withhold Social Security and Medicare (collectively, FICA, which stands for the Federal Insurance Contributions Act) taxes from their pay.
Because you’re the employer, the bonus doesn’t qualify as a “gift.” Tangible gifts under $50 are not taxed, but cash gifts over that amount are subject to taxation.
For families that use an online payroll service to better manage their household and/or small business payroll, SurePayroll provides a handy “gross-up” function – so if a parent wants to pay a holiday bonus and cover the taxes they can use our calculator and figure out how much to give so that taxes can be covered.
Remember that all bonus payments are always at the discretion of you, the employer. Your household staff’s length of employment, overall performance and your own financial situation are all factors in this decision. Bonuses generally reflect your appreciation and recognition for a job well done.