Nanny Taxes: A Guide for Caregivers

Given the employment agreement and situation vary from caregiver to caregiver and family to family, it can be difficult to understand exactly how to file your taxes when the time comes. We’ve got some guidance for you to help demystify the process!

BABYSITTERS & NANNIES ARE W-2 EMPLOYEES

This applies to full time, part time, and yes, even occasional babysitting! Classifying babysitters and nannies as 1099s or independent contractors is legally inaccurate according to the IRS and can have major tax consequences. If a family pays you more than $1,000 in a calendar quarter or $2,200 in a calendar year, there are tax implications.

LEGAL PAY PROTECTS YOU

Being paid legally for both short-term and long- term arrangements with families provides you with important benefits and protections, like access to unemployment insurance, accrued paid sick leave, and worker's compensation if you get hurt while on a job.

Additionally, building your work history means you are more easily able to rent an apartment or a car. You're also paying into your own Social Security and Medicare. Finally, come tax time, you're not on the hook for both the employee and employer shares of taxes.

SHOULD I WORK WITHOUT LEGAL PAY?

If a family won't pay legally, consider the reasons why. Is cost a significant concern? If so, how secure is the position? If they are uninterested in the details of legal employment, what will problem-solving and conflict resolution look like in the future? If something goes awry, how will you hold the family accountable without implicating yourself? It pays to be paid legally and professionally.

ALL ABOUT GETTING PAID

Smart Sitting handles employment and taxes for temporary and short- term jobs, keeping things simple for you and our families. On Mondays, we verify all hours worked the previous week (Monday through Sunday) and pay you via direct deposit on the upcoming Friday. As long as you complete your paperwork and submit timesheets by Sunday night, payments are smooth sailing! If you're hired by a family for a long-term full-time or part-time position, the family will handle payments on their payroll. In those cases, we'll still need your timesheet to make sure we get paid for what we do!