Some families believe hiring a live-in nanny is out of their budget because having someone live in their home is assumed to be more expensive than hiring a live-out nanny. However, depending on your needs, this may not actually be the case. In fact, if your family is struggling with finding a nanny that has a flexible schedule, you might find hiring a live-in nanny is just as manageable financially. In this article, we’ll cover:
- What you should pay a live-in nanny
- How to manage your nanny’s hours
- Overtime for live-in nannies
- Unique expenses for live-in nannies
- Managing taxes for a live-in nanny
“Every child care situation is unique and families with busy schedules may need a nanny to work irregular hours that are more efficiently handled through a live-in relationship,” says Desiree Leung, Head of Operations of Care.com HomePay. “And that scenario can work out really well for a nanny who wants to save money on rent or is at the end of their current apartment or home rental lease.”
Because your nanny will live in your home, it’s common to pay slightly less per hour than a live-out nanny as a way to account for the cost of room and board. Just remember that you shouldn’t be paying an hourly rate below your state’s minimum wage, so check your state’s laws before you make a final decision.
Care.com’s nanny pay calculator is a good resource to find pay rates in your area and then you can adjust by a dollar or two per hour if necessary. Keep in mind, the pay rate for your nanny can differ based on several factors. Things like experience, education and holding certain certifications can dictate a higher or lower hourly rate.
Families sometimes think having a live-in nanny means their nanny is on call for all hours of the day. But keep in mind that your nanny deserves time to be completely free of their duties. Additionally, this schedule could get very expensive for you because you need to pay your nanny for every hour they are on duty. If your nanny is required to be in your home and isn’t free to come and go as they please, they are on the clock.
A good way to be mindful of your nanny’s time is to have a scheduled set of hours that they can expect to work each day. This should be included in your nanny contract and any alterations to the schedule should be communicated to your nanny in advance.
Federal law does not require you to pay overtime to your nanny if they work more than 40 hours in a week. However, the law is different if you live in California, Hawaii, Maine, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New York or Oregon. Check the requirements in your state if you live in one of these areas.
After your new nanny moves in, they become integrated with the rest of your family. That means you need to budget for things like additional groceries, increases in your utility bills, workers’ compensation insurance coverage and potentially adding your nanny to your existing auto insurance if they will be driving your vehicles.
According to IRS Publication 926, if you pay your nanny $2,300 or more during the year, you’re required to withhold taxes from their pay and pay household employment taxes of your own. However, managing this process correctly can make you eligible for tax breaks to help offset the tax costs you’ll accrue and your nanny gains access to several important benefits. And if the idea of being in charge of taxes and payroll makes you uneasy, Care.com HomePay can take care of these household employment obligations so you don’t have to worry about tax withholdings and filing deadlines.