Do you have a nanny who handles a variety of tasks around your home, with the primary responsibility of caring for your child? If so, it is important to become familiar with the many laws associated with how this person is paid.
Note: you can learn more about nanny payment and other household employees by visiting this page of the IRS website.
Before we go any further, discussing how to pay a nanny over the holidays, let’s take a closer look at an important passage from the IRS:
“You have a household employee if you hired someone to do household work and that worker is your employee. 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 does not 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 does not matter whether you pay the worker on an hourly, daily, or weekly basis, or by the job.”
Now that the holiday season is here, you must consider if this will impact the way you pay your nanny. If your nanny has been employed for an extended period of time (such as a year or longer), you may stick with what has worked for you in the past. On the other hand, you may have recently hired a nanny or you could be interested in making changes to the way you have always done things.
Upon hiring a nanny, it is safe to say you discussed items such as pay rate, when he or she is expected to work, and how to request time off. Unfortunately, many people forget to discuss the finer details associated with the holidays.
Here are some of the questions to address without delay:
- What is the best practice for paying your nanny during holiday breaks?
- If you are giving the person time off for the holiday, will they still get paid?
- What is the process of giving your nanny a holiday bonus?
As long as you stay within the legal limits of the tax laws, there is no right or wrong way of paying your nanny during holiday breaks. What works for you may not work for the next person, and vice versa. For this reason, you need to consider the following:
- If you are providing paid time off
- If your nanny is taking vacation days
- If vacation days are used, are they unpaid or paid?
Tip: to make it easy on you and your family, you may want to offer your nanny the same federal holiday schedule provided by your employer.
Time for a Holiday Bonus?
As you know from personal experience, there is nothing more exciting than getting a bonus during the holiday season. On the same note, there is nothing more disappointing than finding that your employer is not giving a bonus.
While there is no law saying you have to pay a bonus, this is something many people do to show their appreciation.
If you decide to give your nanny a holiday bonus, it is up to you to answer these three questions:
- When are you going to give the person the bonus?
- Will you issue a separate check or lump this in with their regular pay?
- How much of a bonus will you pay?
As tempting as it may be to hand your nanny a cash bonus, you don’t want to do anything that could get you or this person in trouble with the IRS. You also need to be aware of whether or not you’ll need to pay nanny taxes.
The best practice is to notify your payroll service of the bonus, allowing for it to be paid out properly and for taxes to be deducted.
It is hard work being a nanny. On top of this, these professionals have lives outside of their job – just the same as everybody else.
This advice should give you a better idea of how to pay a nanny over the holidays. Once you have a solid plan in place, one that works for both you and your help, future holidays will be much easier to navigate.