4 Ways to Get Your Employer to Pay You Professionally

A guide to help nannies talk to their employers about setting up over-the-table payment.

woman with two children

The call came the other day. The family you loved interviewing with and playing with their kids has asked you to be their nanny. The pay is what you wanted. But wait, are they planning to pay you professionally so you can count on benefits and protections, such as unemployment, retirement, workers' compensation, disability, etc.?

Very few families have experience as an employer, so mistakes and oversights are commonplace. You can protect your own interests by making sure your employer knows you want to be paid legally. No matter how much you love the kids, you don't want to get involved in tax evasion.

Watch this video for advice from Care.com's senior managing editor Katie Bugbee on why you should be paying taxes and how to talk to your employer about them. Then check out the tips below for more on how to convince your family to pay you legally

  1. You Are Building Your Future
    The employment taxes ensure that you'll have critical retirement benefits. Social Security and Medicare provide benefits from age 67 until death. However, each worker's benefits are based on their reported income during their working years. The more you report over the years, the more you get during retirement. Workers who allow themselves to be paid under the table will not be entitled to these vital benefits.

  2. There are Tax Breaks to Offset Costs
    Families can offset most (if not all) of the employer tax costs by taking advantage of one of two childcare tax breaks: their Flexible Spending Account and the Child Care Tax Credit. Families with two or more children can take advantage of both tax breaks. You can use a Nanny Tax Calculator to find out how much it will cost the family, and how much they could get covered. Learn more Employer Benefits to Paying Nanny Taxes ?

  3. Nannies Are Not Independent Contractors
    Some families think nannies can just fill out a 1099 at the end of the year. But this is illegal. And the IRS and Department of Labor are trying to crack down on what they call "worker misclassification." This rule is to protect the nannies, housekeepers and other household employees because misclassification hurts the worker. How? Independent Contractors are not entitled to Unemployment Insurance and they have to pay both the employer and employee portions of the FICA taxes (Social Security and Medicare) -- which adds another 7.65 percent to the worker's tax rate.

  4. You May Need Unemployment Benefits One Day
    Say one day, after the kids you nanny for move on to elementary school, the family has to let you go. They are so sad, but they just don't need you to nanny anymore. Then, say, it takes a while to find another job. And you need to pay your bills. You might need to file for unemployment. If you and your employers haven't been paying taxes, the unemployment office will not give you benefits to replace your income. Additionally, the tax agencies will investigate the family you've been working for. This is one of the many ways families get in trouble for tax evasion.

For more information about legal pay and how it benefits you and your employer, check out Care.com HomePay, managed by Breedlove. You can find a wealth of information, tools and resources that can make legal pay easier and less expensive for you and your family.

Your Next Steps:

* The tax information contained in this article should not be used for any actual nanny relationship without the advice and guidance of a professional tax advisor who is familiar with all the relevant facts. The information contained herein is general in nature and is not intended as legal, tax or investment advice. Furthermore, the information contained herein may not be applicable to or suitable for your specific circumstances and may require consideration of other matters.
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Comments (34)
Photo of Stephanie B.
Stephanie B.
Hi Shirley!

You don't need to fill out a W-9 as part of your work agreement. That form is used to capture an Employer Identification Number and you're not a business - you're an employee of the family. You should really share the tips in this article with the family and start having your employment handled in the proper manner. Cash always seems fine in the short-term, but it's not a good long-term solution for you or the family. There is a list of things the family needs to do to comply with household employment laws in Arizona on the HomePay website and I would suggest they take a look and get their tax situation straightened out now so they work isn't overwhelming later in the year. (http://www.breedlove.com/Answers/State-Nanny-Tax/AZ/Overview)
Posted: April 23, 2014 at 10:32 AM
Photo of Brenda T.
Brenda T.
How much should a live-in nanny make working 12 hours a day? I'm very close to LA in CA
Posted: April 23, 2014 at 9:46 AM
Photo of Shirley J.
Shirley J.
Hi, I have been employed as a nanny in Feb. 11 of 2013 to a family in Dallas. I was paid in Cash for the whole year that I worked for them. It was my first job and needing some money, I accepted to be paid in Cash. I am again employed as a caregiver here in Arizona to a private care home and same thing, I'm being paid in Cash but the only difference is that they asked me to sign a w-9 Income tax return. Can you please help me?
Posted: April 22, 2014 at 5:00 PM
Photo of Stephanie B.
Stephanie B.
Hi Tiffany!

Great question and the answer lies in the example you actually provided. A 1099 is supposed to be used for those that are truly self-employed and run their own business. A nanny, full-time babysitter or other household employee does not fit this classification and therefore cannot - by law - file their taxes this way. The IRS has ruled definitively that these employees must file taxes using a W-2. Families that are caught via audit can potentially face tax evasion charges due to worker misclassification.
Posted: March 12, 2014 at 12:25 PM
Photo of Tiffany H.
Tiffany H.
What is the problem with demanding higher pay and requesting a 1099 be issued? I'm not sure why this would be illegal, as stated in the article above. My family has been self employed in a different service industry for years and this is the way we file our taxes yearly.
Posted: March 11, 2014 at 9:40 AM
Photo of Antoinette G.
Antoinette G.
I recently just finished a job and did not know tha t i was to pay taxes or that it was illegal to be paid the way i was. so tyhank you for the information of the tax laws that we should be paying and how it helps me to avoid fraud.
Posted: January 08, 2014 at 1:32 PM
Photo of Rosita P.
Rosita P.
This is true and it happened to me, if I did not insist to be paid legally then I would not have received unemployment benefit when my I lost my job when my client passed away. It was not easy to convince my employer to pay me through payroll, it took a lot of discussion.
Posted: October 10, 2013 at 5:06 PM
Photo of Rebecca R.
Rebecca R.
Linda,
Most people hire nannies because they do not want to deal with a daycare, which tends to be very expensive, and they figure if the person is comig to their home, their child will get more one on one care, and because there are so many of us out there, they wil usually find one that will work for signifigantly less money than what the day care center would cost. PLUS, daycare centers DO NOT do laundry, cook meals, and do "light housekeeping" which is a fancy way of saying clean up after my family so that we don't have to. For all we do, we are amongst the most underpaid employees in the country. It's very sad.
Posted: August 20, 2013 at 8:15 PM
Photo of Linda S.
Linda S.
I think that most people hire nannies these days because both parents are working and there are not enough hours in their day. When they think of adding the hassle of dealing with taxes, they shut down. The whole tax process is so complicated, and they just don't have the time. If the IRS could make it simple for people to understand, step 1, step 2, etc., maybe more people would be willing to pay their share of the taxes and file the appropriate forms. Also if they are shown (as this site does) the specific tax advantage for themselves as well as the nanny, they might be induced to try to set it up legally.
Posted: August 04, 2013 at 12:34 AM
Photo of Melani C.
Melani C.
I totally agree with you Marlene!! It's the parents that are the problem and I get so tired of the ignorance of it all!!! I love being a nanny it's just a hassle dealing with so much drama!!
Posted: May 17, 2013 at 12:34 AM
Photo of Natalie B.
Natalie B.
Nearly all the family's I interview with think I am a 1099, and when I try to explain they say that's why they are paying me more then 10/hour. At 10/hour I could work a mindless job with minimal responsibilities. I am watching children needing to be on my toes, and ensure their safety. A W2 after taxes for nanny/family is 15-20% +/- but as a 1099 the nanny loses 25-45% in taxes (with nothing to use a deduction too). I've had to switch jobs to "normal" ones due to this head ache, I enjoy nanny work way more then working else were, but man I need proof of income to get basic things (housing, credit cards, insurance, medicare, ect)
Posted: May 16, 2013 at 12:53 AM
Photo of Marlene P.
Marlene P.
Marlene P. Children are the most precious gift that God has given us, they deserve excellent care and their caregivers deserve excellent pay. Parents please get your priority in order and show your appreciation for caregivers who work hard to produce a wonderful human being you can be proud of.
Posted: February 26, 2013 at 11:57 PM
Photo of Marlene P.
Marlene P.
I have read the above statements and totally agree Nannies are under paid with no benefits. Parents want to pay the less they can, but demand high quality standards such as college degrees, experience, use of your car, housework, cooking overtime without pay, shopping, appoints, laundry and anything they can think of because taking care of the kids comes second. I did work for a great employer who did taxes ,but moved out of town. I am on unemployment, but having a hard time finding a job paying a salary with taxes I can live and pay my bills on Most jobs on this site is less than the state wage. You can be a professional, love children, be a great caregiver, but not get paid. I truly love what I do and parents don't want to pay for what they are getting
Posted: February 26, 2013 at 11:31 PM
Connie C.
Please, please send this to all the parents.

They think they are helping me by paying me under the table. That was my family's response when I requested a nanny tax sevice. I have informed them that I was claiming my income.
Posted: February 23, 2013 at 10:54 AM
Photo of Maria V.
Maria V.
Well,in Florida is very easy to find overqualified ,educated nannies to take care of children and aging adults.In my case I decided to educate myself in the Community College,file as an independent or self-employee and work my budget with the best job available.I learned that people who gets more than $500 annually is supposed to be reporting it as an earning and anything higher than $4000 annually ,who files,will be adding 4 points to the 40 minimum credits necessary to think of retiring.Attitude is part of success in difficult times and I always think that the best way to find a better job is while working...staying at home never worked as well as getting out and getting busy.
Posted: February 20, 2013 at 10:23 AM
Photo of Janine H.
Janine H.
I too have run into a lot of issues with legality while attempting to use Care.com. I've had people offer less than minimum wage for up to 60 hours a week. Obviously not abiding by minimum wage laws would most likely mean not taking care of my taxes. My accountant said, you don't have to declare if you aren't provided a 1099 for any employment as an independent contractor or if you make less than $600 at any one job for the year. If I'm making say $10/hour and have to pay my fed, state & both employer & employee FICA, with travel & materials, I make close to nothing. I too have run into families asking for childcare, petcare and housekeeping as well as errand-running. In these situations, I also request mileage reimbursement in addition to the regular pay and it's always a wash. I also hate careseekers that require references, but don't say so until the last minute or want references who can be contacted on weekends or breaks; mine are from teaching.
Posted: February 20, 2013 at 10:00 AM
Jami L.
Ketevan M. is doing exactly the right thing. Make sure you calculate what it would cost you to pay your own taxes (these need to be paid quarterly as an independent contractor in some states). This may mean needing the assistance of an accountant. Include that additional cost. Pass the cost of taxes and any other expenses necessary to legally file your taxes along to the employer. This is exactly what any other business does. Just "the cost of doing business."
Posted: February 20, 2013 at 9:54 AM
Flavia B.
I have been in work force for over 5 years, and always thinking of getting paid on books and tried to ask the choice my employer, but most times they said they pay off books, and I agree. Since I work part time, that was a better arrangement for me, I'm only getting a little over $9500/year. Though I still think that the benefits outweigh the trouble for the employer. I was always looking for some group that favors legal hiring for this kind of trade. It is unfortunate that the employers hire someone illegal and pay them whatever rate they are offering, which they will take because, they have no options. And that is where we at a loss, we are up to competing with all these people that are not legal and are taking the jobs and maybe a benefit that employers could offer to those that are wanting and deserving. Anybody know a union that can help us out, or for those who are good as creating one, maybe we can get together and create one. It will be like any other union who will pay dues and can work on our cause, since these employers and employees have an edge, we make out own edge. Please contact me and maybe we can found one or search if there is already one that exist and we can join. Only when we work together, things can happen and if don't, these abuses from both the illegal and the employer that hire them can be educated and be righted.Flavia, 310-374-9093.
Posted: February 20, 2013 at 9:51 AM
Photo of Hailey C.
Hailey C.
I was hired by a family, pay is very low and in cash. I accepted only because it was my second job and provided just a small amount of income. They brought up taxes 3 months later and I told them I would love to do taxes! So they said a 1099, after I told them I wanted a W2 they never talked about taxes with me again. Now, I want to ring it up again but don't know how to go about the conversation. I also think I would bleed to ask for a pay increase seeing as the I only make $5.55 and minimum wage in California is $8. Is this wrong of me? I always base my job on the child and not the money but I do not want to get into tax evasion and I want the benefits of paying taxes. So, I work full-time I also clean everywhere in the house (yes, even the toilets!) I hve 3+ years of experience and not just some teenager. Is $8/hour, plus W2 taxes, and lowering my job duties to only child care and baby laundry and dishes fair of me to ask??
Posted: February 20, 2013 at 9:31 AM
Photo of Stephanie S.
Stephanie S.
I think it's important for employees to be treated as fairly as possible and it is so sad that this is hard to find. What bothers me even more though, is the fact that it is illegal not to pay overtime for anything over 40 hours and I have yet to find an employer that will offer this.

Sad to know that being paid on the books and getting much needed overtime is such a challenge! And lots of luck if you happen to get sick or break an ankle, without benefits for healthcare, nannies are not exactly treated like the valued members of the family that most employers claim to see them as. I think because many are either here illegally, at least in my area, employers think that they don't have to respect or care enough about their nanny to follow the law and provide basic human rights like healthcare.

What kind of other job would be allowed to hire a full time worker and not pay taxes, overtime or healthcare?

Nannies care so much and love the children and the families but don't get the same love in return. When the health problems or retirement or new job search comes, this shows more than ever. Something needs to be done to protest this and protect nannies and hopefully get more respect for being a domestic in someone's home. I mean, it's an important job. What would they do without a nanny? Or with a bad or uncaring one? Things need to be more balanced and ethical. Just because a good one loves their job and has lots of fun doesn't means that they deserve to be treated like a second class employee compared to other jobs out there.
Posted: February 20, 2013 at 9:30 AM
Photo of Carol M.
Carol M.
Why is it so hard for people who work as contractors to find out their legal and fiscal rights, responsibilities, and obligations? Most tax preparers I've talked to never seem sure as to:

1) what jobs require licenses in Pennsylvania (for example, does pet sitting?)
2) What forms to use to declare income?
3) Whether or not those who employ us who have paid us above $600/year should provide us with 1099s
etc. etc. etc.
Where do we go to find this information? Don't tell me the IRS, because I'm finding them either misinformed or unable to tell me!

Carol Macomber
Posted: February 20, 2013 at 9:26 AM
Photo of Andrea V.
Andrea V.
hello! My name is Andrea, my first job was in NJ in West NY, NJ and they spoke of caring for your child for four months a total of 50 hours a week, I told them I needed stating the hours for the books, I began to work with these people since December, they have in their care of their small profile and Thin baby cleaning her apartment, the reality is that I take care of the baby and the baby staff and clean Thin, the third week I told which I could not do both one by that and she wanted me to clean up. up his clothes, I was hired for the girl, they abused the work, the next day they said they had gotten a day care for her daughter, is illegal what they did because I had no compensation, they were friendly and they looked for other people for them to do the same thing again, I have not had good experience with this family.
Posted: February 20, 2013 at 8:55 AM
Photo of Virginia R.
Virginia R.
Great words thank you care.
Posted: February 20, 2013 at 8:46 AM
Photo of Ketevan M.
Ketevan M.
Its the same situation with caregiving jobs. People don't want to bother to pay you on the books. for some reason they think that it would cost them more to cover the employer taxes.They would rather give you the 1099 in the end of the year so you pay all the taxes on the income. since it has been an issue for so many years for me, i came up with a solution so to speak. i charge them more an hour than I would working on w-2. in the end of the year it offsets the taxes they had to pay.
Posted: February 17, 2013 at 11:37 PM
Photo of Rebecca R.
Rebecca R.
According to what I found on the IRS website, income under 9500.00 a year is the current limit in which you do not have to pay taxes. Some places still recommend it.. In my case last year, I only made 4500.00. It would have cost me nearly half that to file taxes. It varies from state to state but the fed laws can be found on the IRS website
Posted: January 02, 2013 at 8:31 AM
Photo of Kathryn K.
Kathryn K.
Is there a certain amount of money you must make in order to even file with your income tax return? I am working only one to two days a week. The family has not mentioned taxes and to tell the truth until I just read these posts I did not think of it either. So, is there am amount. I really want to stay with this family. I am also looking for another part time job but it is really hard as I am coming across so many that want full time nannies. Or they want you available on call, different days each week. I have been trying to find another part time job for over four months as of yet no luck. Any advice for me would really be appreciated.


Kathryn K
Posted: December 22, 2012 at 5:12 PM
Photo of Vernita G.
Vernita G.
Employers really don't want to go through the hassle for some reason. My last employers did b/c I told them my aunt, who's my accountant said it had to be done!
When I left my job and placed an ad on care.com, I found that it was an issue again , so I just decide to put a percentage aside from every pay and just pay the taxes myself.
Posted: September 27, 2012 at 12:38 AM
Photo of Cinthia A.
Cinthia A.
SHELLEY C., that means you need to get a liscense for FAMILY DAYCARE. it also means that need to get as many children as possible in order for you to keep your business running, because it's a business. I like Family daycare, i almost got my liscense once if i didnt have to do a 5+grand work done on my basement installing fire alarms and making a restroom. dont let anybody take your dream.
Posted: September 25, 2012 at 6:13 PM
Photo of Shelley C.
Shelley C.
I am considering working not as a nanny, but as a child care provider in my home. What are the necessary steps I need to take to ensure things are done legally, from the first day until tax day?
Posted: September 25, 2012 at 9:42 AM
Photo of Linda L.
Linda L.
Hello. I had the same problem. I met with the family and told them in the interview that I wanted to be paid on the books. They said, "we can get a tax deduction for child care ". Then I had a trial day which I got paid in cash. The dad asked if I was available on September 5th and 6th. I said yes. On September 2nd, I got an email from care.com about a new posting. It was the same job that I had applied for. I asked the dad about it and he lied and he said, oh there shouldn't be, I closed out the job. I then asked him if we were still on for the 5th and 6th and he said that his accountant was on vacation and that we didn't have time to set up the payroll so there is nothing for those two days. Yet he said that the 17th was still confirmed and that everything will be in place at that time. However, I had not filled out a W-2 yet. During the week of the 10th, I asked him if there was any other documents such as an I-9,W-2 to fill out. A few days later, he told me that the hours have decreased and that he didn't think that I would be interested in the job. On September 14th he depleted an ad for the same job. The hours were decreased about 8-10 hours. But he didn't ask me. I believe that they had no intention of ever paying me on the books and just told me that they would. I tried emailing him several times and also tried to call him and he ignored my calls. I even said that I would agree to be paid off the books if it would be better for you. So much for trying to be legal. I had another position that I applied to and I asked how they pay, and they said off the books. I won't make that mistake again. The first family is still searching for someone. I am glad that they are scrambling to find someone. It serves them right. Just wanted to share the tremendeous amount of unfairness that goes with the job. I hope the second job works out for me. There needs to be a course for how to hire a nanny. Maybe I run it. Linda
Posted: September 23, 2012 at 10:29 AM
Photo of Alyssa G.
Alyssa G.
The family I work for loves me and I love them, but they don't want to pay me over the table to avoid the "hassle" of filing - even though it benefits them to do so. So strange. I'm planning on discussing taxes at my next renegotiation period; the reward outweighs the hassle for me.
Posted: September 23, 2012 at 1:52 AM
Photo of Cinthia A.
Cinthia A.
Natalie Z., paying cash without taxes is a way many families are using now because they do not want any complications, but if you are looking to be a full-time nanny i would request the same thing. Try doing a phone interview first and ask if they do taxes, and if not, continue your search. Maybe considering being a part-time which will give you the benefits of finding a more stable job or go to school while you do what you love the most. it's an option m doing myself after i've worked in childcare for so many years, i decided to do it part-time while i work somewhere where my taxes are being witheld.
Posted: September 21, 2012 at 6:39 PM
Photo of Natalie Z.
Natalie Z.
I recently was offered a position as a Nanny and I was the families first choice. This was a huge complement to me as it was based on my qualifications as well as my personality. The salary offered was acceptable too but when I explained the need to be an employee with taxes with held and a W2 at the end of the year, the job offer was retracted and given to another Nanny who would accept cash. I even tried explaining the financial benefits to both of us in regards to childcare tax credit and flex spending account. This is not the first job I've lost because I want to be an honest taxpayer and build up my Social Security. It is so frustrating! !
Posted: September 20, 2012 at 10:19 PM
Photo of Banmatti B.
Banmatti B.
A very helpful information . I like it very much, thanks for the post.
Posted: September 17, 2012 at 6:08 PM
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