You likely have an hourly rate in mind that you’d be comfortable paying a nanny or other household employee. When determining your budget, keep in mind your tax responsibilities that need to paid on top of your employee’s pay. You may also need to pay for workers’ compensation insurance. According to federal law, household employees are non-exempt, which mean they are paid an hourly rate and not a salary. Understanding the difference between gross pay and net pay will be a big help when negotiating the right pay rate for your nanny.
This is the pay for your nanny or household employee before taxes are withheld.
Sometimes referred to as “take home” pay, this is the amount of money your employee receivesafter all taxes have been withheld.
You should make it clear to a potential hire whether you’re offering gross pay or net pay to avoid any confusion come pay day.
To help illustrate how the difference between gross and net pay works out in real dollars, please watch this brief video demonstration from our friends at GTM Payroll Services.
Visit GTM’s Nanny Tax calculator to determine a gross pay and hourly rate for your employee that will generate a specific take-home pay.
We are also here to help you discuss salary options with your nanny. For more information, contact us at (518) 348-0400.