How to Reimburse a Nanny for Gas and Mileage
If your nanny drives your kids around, learn how to handle car expenses.
When you hire a nanny, there are lots of details to work out. For example, driving expenses.
Does your nanny drive your kids to school, play dates or activities? Does she run errands for you? If your nanny uses your car while she's caring for your kids, she should be compensated for any gas she buys or tolls she drives through. If she regularly uses her personal car to chauffeur your kids, she should be repaid for gas, tolls and any wear and tear on her car.
But how should you handle the reimbursement? If you live in California, Washington, D.C., Massachusetts or Pennsylvania, the law requires you to reimburse your nanny for the miles she drives in her vehicle while she's on the clock. Commuting to and from your home does not count toward her mileage reimbursement. The 2018 IRS mileage reimbursement rate is 54.5 cents per mile.
If you don't live in one of those four states, here are five options for handling mileage reimbursement. Use the one that works best for your situation.
Use the IRS Mileage Rate
The IRS issues a standard mileage rate to calculate the cost of gas, maintenance and depreciation of a car used for business purposes (like running errands for families or transporting kids).
Using this 54.5 cents per mile rate is helpful because it covers all of the expenses that your nanny could incur from using her car. (If you live in an area where gas is particularly high, you may want to increase the rate slightly).
But for this to work, your nanny needs to keep track of the miles she drives in order for you to use this rate. Try this mileage log and expense report from Microsoft.
You can also have her create an online spreadsheet that you both can refer to, using a program like Google Drive. Track the days she works and the miles she drove each day. When pay day comes, it will be easy to figure out how much you owe her. This method will also help keep track of her hours in case you owe her overtime.
Note: Gas and mileage is not considered taxable compensation, so neither you nor your nanny has to pay taxes on it. To find out more about nanny taxes, contact Care.com HomePay.
Flat Rate Compensation
If keeping track of all the miles driven is too much of a hassle, you could also write a flat rate check or stipend for gas and mileage. If your nanny drives a consistent number of miles to transport your children, this option makes things a little easier. But since you'll just be estimating what expenses your nanny will incur when using her car, be sure to communicate with her to confirm that you aren't underpaying (or overpaying) her.
Reimbursement Per Job
For part-time nannies, per job reimbursement is more fitting. If your nanny periodically drives your kids or doesn't follow a set weekly schedule of covering the kids' transportation, it makes sense to compensate her each time she uses her car. It's a perfect way to give your nanny her reimbursement in a timely manner so that she's immediately repaid for the transportation expenses.
Reimbursement Per Paycheck
Repayment of gas and mileage with each paycheck is more common with full-time nannies that regularly help with driving your kids. Whether you choose to use the IRS standard mileage rate or a flat rate, including it with each paycheck makes it easy for you and your nanny. The regularity of both the paycheck and the transportation reimbursement keeps everything on schedule.
Some families simply choose to give their nannies a raise to cover the extra driving expenses. It's an easy solution, but the problem with this method is that both you and your nanny then have to pay taxes on the extra wages. Do the math, but it may end up costing you more.
Discuss these options with your nanny and agree on a system that works for everyone. Make sure you include the details in your nanny contract. Don't have one yet? Use the Sample Nanny Contract on Care.com to get you started.
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