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.
This arrangement can help you save money and maintain your flexibility with child care. Your children will still receive individual attention from the nanny and get the added bonus of socialization with the other kids in your share.
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.
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.