Thinking about participating in a nanny share with another family? In a nanny share, the nanny cares for the children of two or more families at the same time. But it takes thoughtful planning to create a successful nanny share arrangement.
A nanny share helps make in-home child care affordable for many families. Each family in the nanny share pays a portion of the nanny’s hourly rate rather than her full rate if you were hiring on your own. You’ll receive more personalized care – as opposed to a daycare – in the comfort of your home and/or your nanny share family’s home. Your child won’t be exposed to as many illnesses that other children frequently bring into a daycare. That means you don’t lose as much work time because you need to be home with a sick kid. Plus, a nanny share provides some socialization for your child with your nanny share family’s children that they would have received in daycare and may have missed if cared for on their own at your home.
Remember, a nanny share is a business relationship you enter with another family (or families) and the nanny. To ensure a successful nanny share — one that benefits you, your children, other families, and the nanny — make sure you follow these important steps.
1. Create a Work Agreement
Get together with the other family/families and create a work agreement to specify the nanny’s schedule, wages, benefits, and responsibilities.
2. Communicate throughout the Process
The key to any business relationship is communication. This means between you and the other family/families and with the nanny. Make sure any issues between the families are worked out BEFORE talking with the nanny. This makes sure your communication is clear and eliminates confusing or conflicting messages.
3. Register with the IRS
Each family must register with the IRS and the New York State revenue department. A tax identification number will be issues to each family.
4. Obtain Workers’ Compensation Insurance
New York requires workers’ compensation insurance for domestic employees who work 40 or more hours in any week. For nanny shares in New York, each family must obtain coverage for the nanny.
5. Provide Your Nanny with Employment Forms
Your nanny must complete an I-9 form and a W-4 form for each family.
6. Withhold Taxes from Your Nanny’s Pay
Each family must withhold federal and state taxes from each paycheck.
7. Complete a Schedule H
Each family must complete a Schedule H form when filing their personal income taxes. Schedule H accounts for the federal taxes withheld from your nanny’s pay.
8. Issue Form W-2 at End of Year
Each family must issue Form W-2 to the nanny at the end of the year.
The tax responsibilities and legal obligations for a nanny share can be complicated and time-consuming. Doing it incorrectly could mean fines and penalties from the IRS. Being non-compliant with the law — paying your nanny under the table — could lead to audits or employee lawsuits. Using a payroll company like our affiliate company GTM Payroll Services will remove the guesswork, ensure you are compliant, and free up your time for the things in life you enjoy.
Contact us at (518) 348-0400 for more information.