How to Legally Pay Your Nanny

Many parents truly want to pay their nanny legally, but because of simple ignorance or the fear that the process may be too costly and difficult, they opt to pay their nanny off the books. But paying your nanny legally is not an option. Contrary to popular belief, the law states that nannies are not independent contractors and are actually household employees.So what simple steps can you take to be sure that you are paying your nanny legally?

Things You'll Need

  • Federal and state forms

Instructions

  1. How to Legally Pay Your Nanny

    • 1

      Obtain your local and state employer identification numbers. You need these numbers to pay your nanny legally. You will need to get and complete form SS-4 from the Internal Revenue Service to obtain a federal number. To get your state employer identification number you'll need to contact the office in your state that handles employment.

    • 2

      Verify that your nanny is legally able to work in the US. You'll need to obtain and complete form I-9 from the US Citizenship and Immigration Services office.

    • 3

      You'll need to report your new nanny as hired. This process can vary state to state, so you'll need to contact your state office that handles employment to learn how to report a new hire to your state government.

    • 4

      Establish your payroll system. There are many companies that offer nanny payroll tax services, but you can do your nanny payroll on your own. As an employer, you are responsible to withhold taxes and to pay into Social Security tax, Medicare Unemployment Insurance and Workman's Compensation Insurance in some states. The sum of these taxes can amount to up to 10% of your nannies total salary. Although not required, many employers often also withhold their nannies income taxes.

    • 5

      Pay your nanny according to federal and state labor laws. Federal law states that if your live out nanny works more than 40 hours in a 7 day work week, she must be legally paid 1.5 times her rate for every hour she works over 40. You'll need to check with your state office that handles labor law to determine what your state labor laws require. Live-in nannies are not subject to be paid overtime per the federal law but must be paid for all hours that they have worked.

    • 6

      File the proper year end tax forms. Be sure that your nanny gets her W-2 form by January 31 of each year. You'll also need to file this form, along with a W-3 to the Social Security Administration by February 28 of each year.

    • 7

      Keep good records. You'll want to keep a file with your nanny employment records for a minimum of 5 years.

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