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How to Reimburse a Nanny for Gas and Mileage

Lauren Wolfson
June 22, 2018

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.

  1. 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.
     

  2. 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.
     

  3. 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.
     

  4. 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.
     

  5. Pay Raise
    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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Comments

Does the amount you pay the nanny to cover their auto expenses to drive the kids qualify as a dependent care cost for for the child care tax credit?

Hi, 

I am providing childcare for a family and have a unique situation. I was picking up two boys from school and taking them to there home to help with homework and care until the mother got home from work. There has been an issue and I no longer wanted to be involved. However, she pleaded that I stay and make different arrangements. The new arrangements are to pick them up from school, take them to a park until I can drop them off at her work with an additional gas compensation.

The problem is I believe I should still be on the clock until I return back the the original pick up point. I think I should be comped for gas from the school to her work and back to the school, even though I will not have the boys in the car with me any longer. I think it is fair to charge until the original pick up location and she thinks it ends when I drop them off at her work (which is 20 miles out of the way). 

What is fair here?

User in Atlanta, GA
May 27, 2016

My situation: I drive family children 100 miles in my own vehicle per week. I was given $20.00. They believed this was a great amount. I mentioned about paying the IRS rate, and that it is for gas and wear and tear on my car. I was told they pay based on the miles per gallon your car gets!!...lol -- Therefore, my car gets about 24 mpg, this week I drove 80 miles, I was given $20.00. I drive the children, in traffic, with air conditioning a good distance, as you can tell by the mileage. I've never had anyone say anything of this sort regarding the calculation of reimbursement for driving. This is very disconcerting. I was also given two days off at the last minute for the memorial day holiday with no pay. I'm just not accustomed to this. I believe in advocating for the fair and proper treatment of a Nanny. I am a born American, however, I want proper treatment for everyone who does this type of work. signed, exasperated

User in Austin, TX
Dec. 16, 2013

Hi Susan! According to federal law, mileage reimbursement is only valid for the miles your nanny drives while she is on the job and she must drive her own car. It does not include her commute to and from your home. The reimbursement rate is currently 56.5 cents per mile, but will decrease in 2014 to 56 cents per mile. Additionally, only California, Washington D.C., North Dakota, Oregon and South Dakota require you to reimburse your nanny if she drives her car on the job. However, no matter where you live, it's a nice thing to do if you require the nanny to drive the kids around on a regular basis.

User
Dec. 16, 2013

Hello, I'm new to this. I hired a nanny who lives 26 miles away and drives to come to our house. She doesn't have to drive my daughter anywhere as of now; she's only 2 months old! She is asking me for mileage and gas compensation because she lives this far. Is that something I should be doing? FYI, I pay her 15$/hour.

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