Nannies and Sitters: Do You Know What “On the Books” Means?
If you’ve worked as a nanny or babysitter, you’ve probably heard phrases like “paid on the books” or “under the table.” But what do those phrases actually mean – and why are they important for you?
As a nanny agency, we get asked this question a lot. So we’ve put together this quick primer that breaks down exactly what you need to know.
What Does “On the Books” Mean?
When nannies are paid on the books, it means their employment is legal, documented, and reported to the IRS, with taxes taken out. You are considered a household employee, and your pay is treated just like any other formal job.
Here’s what that includes:
Your income is reported to the IRS (for tax purposes)
The family you work for pays required payroll taxes (this doesn’t come out of your pay)
You receive a W-2 form at the end of the year that you need to file your taxes
Taxes like Social Security and Medicare are properly contributed on your behalf, meaning that when you are older and need them, you are eligible for them
In short, being paid on the books means you are a recognized employee with legal protections and benefits. That’s a good thing!
Why Nannies Receive a W-2 (Not a 1099)
Some families offer to pay nannies with a 1099, but this is not correct. A 1099 form is for independent contractors, but nannies are considered household employees, so a W-2 is the legally correct employment form.
Benefits of Being Paid On the Books
Some people think, wait, with taxes and everything taken out of my paycheck, I end up with less cash in hand at the end of the week. That doesn’t feel good.
Choosing to be paid on the books may mean slightly less take-home pay upfront, but it comes with significant long-term advantages.
Social Security & Medicare contributions – so that when you are older you can get Social Security checks and have access to healthcare
Unemployment Insurance – so that you can get financial help if your job ends unexpectedly
Proof of income – it can be really hard to rent an apartment, apply for loans, or get a mortgage if you can’t prove your income, and for that you need documented, on the books wages
Tax compliance and following the law – being paid on the books is the legally correct way to work, and not doing so may lead to penalties, audits, and legal trouble
Real-World Example
The COVID-19 pandemic was a rough wake-up call for many nannies in our network. They couldn’t go to work, but without on-the-books work they couldn’t prove a loss of income and did not qualify for unemployment benefits.
Being paid on the books provides a safety net when you need it most.
What Does “Under the Table” Mean?
The opposite of being paid “on the books” is “under the table” (or simply “off the books”).
Being paid under the table (or “off the books”) means:
Your income is not reported to the IRS
No taxes are withheld or paid
There is no official employment record
We get it, it can seem appealing. You end up with more cash in hand at the end of the week, and maybe it just feels easier than all the paperwork required for proper employment. But it comes at a cost.
With under-the-table pay, you get no unemployment benefits if you lose your job, no Social Security in the future, no workers’ compensation protection, no proof of income for housing or loans. And, of course, there are severe legal and tax consequences for both you and the family if you go this route and the IRS finds out.
In our real-world, pandemic example above, some nannies who were getting paid under the table still applied for unemployment (they’d lost their job and become unemployed, after all!) – the result was that the IRS came knocking, asking both them and their employer why this income wasn’t reported.
Real Talk: Should Nannies Be Paid On the Books or Under the Table?
If you’re still wondering, Should I get paid on the books or under the table for my nanny job?, our answer is clear:
Being paid on the books is the safer, more professional, and more sustainable choice.
It protects your income, your future, and your rights as a worker. While under-the-table pay may offer short-term wins, it leaves you vulnerable in the long run. It’s not just about taxes (which are important to keep your community running!) but about stability and protection for you and a more professional career path.
Get guidance from your favorite nanny agency
If you’re currently being paid under the table, it may be worth starting a conversation with your employer about transitioning to a legal payroll setup. It’s a step that benefits both sides – and gives you peace of mind moving forward.
If you are a sitter or nanny in the Smart Sitting network, you can always reach out to us for advice and guidance on how to approach this conversation. And if you’re not a caregiver in our network, what are you waiting for? We can help you find a great, professional childcare job that aligns with your schedule and skills while also helping you navigate those sometimes tricky conversations like fair and proper pay (though it should be a no-brainer). Apply via the button below!