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cateyemm
Twins!
Member since 7/10 8027 total posts
Name:
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Paying nanny off the books versus on, using FSA
Can someone help me figure out whether it's better for me to pay a nanny less money off the books versus paying her more on the books through my flex spending account (pre tax dollars). We would be paying $15 off the books- how would I figure out what the equivalent to that is on the books?
TIA
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Posted 7/31/13 12:58 PM  |
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nycgirl
Angels!
Member since 3/09 7721 total posts
Name:
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Re: Paying nanny off the books versus on, using FSA
Depends on your & nanny tax bracket.
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| Posted 7/31/13 1:56 PM |
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JSDB
<3
Member since 1/13 1329 total posts
Name:
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Re: Paying nanny off the books versus on, using FSA
You need to know the nanny's tax bracket to determine her take-home pay.
But, there are other considerations as welll in deciding whether to pay on or off the books. Ex: other costs associated with paying on the books aside from paying a higher salary so her take home is the same. you make certain contributions and have to file paperwork too and to be honest it's a hassle.
On the other hand, paying off the books is illegal if you pay household help more than something like $1100/year and you would need to lie on your taxes. Especially with my dad as our CPA I didnt feel comfortable doing that or asking him to sign off on it. I always would have worried that we would get audited and get caught.
I think it's ridiculous that the govt makes it so complicated to pay on the books -- I think it should be a lot simpler and tax-deductible like a business expense because most people who employ a nanny are doing so so that they can work. Most of my friends paid their nannies off the books. I found that the nannies who were willing to be paid on the books were US citizens, tended to be educated, and wanted a documented work history. It also benefited our nanny to be paid on the books because when we moved she was able to collect unemployment.
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| Posted 7/31/13 2:14 PM |
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alli3131
Peanut is here!!!!!!
Member since 5/09 18388 total posts
Name:
Allison
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Paying nanny off the books versus on, using FSA
And technically youa re supposed to have Workers compensation insurance.
In NYS if you have one employee you are required toprovide the coverage. Now that being said.....no one does!
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| Posted 7/31/13 2:18 PM |
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JSDB
<3
Member since 1/13 1329 total posts
Name:
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Re: Paying nanny off the books versus on, using FSA
Posted by alli3131
And technically youa re supposed to have Workers compensation insurance.
In NYS if you have one employee you are required toprovide the coverage. Now that being said.....no one does!
I am pretty sure the workmans comp is only if its 40+ hours a week. We tried so hard to do everything legally and by the book but didn't realize we needed workmans comp so we never got it. When our nanny filed for unemployment we got a letter that unless we could show proof (and they couldnt backdate it) we would potentially owe something like $30k in penalties. She only worked for us for 6 months! We nearly had a heart attack. Luckily I looked up the statute and saw the 40+ hour rule. Our nanny was part time and less than 40 hours a week. I am so glad we no longer have a nanny and don't need to worry about on the books v. off the books or complying with the various requirements 
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| Posted 7/31/13 2:24 PM |
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MrsO
Big Brothers to Be
Member since 1/07 4521 total posts
Name:
Maureen
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Re: Paying nanny off the books versus on, using FSA
At a minimum you have to either withhold her portion of social secuirty and medicate (7.65%) So if she wants to make sure she is taking home 15/hr then you have to up her salary to 15*1.0765 = 16.14 an hour. We did not take into account how much income tax she would have to pay. I thought it was fair we were covering ss and medicare and she would worry about her income tax since everyone is isn a different spot. When you do your taxes at the end of the year the employee and employer portion is calcualted and you pay it with your return.
The expenses you will have is employer portion of social security, medicare, and nys unemployment insurance. In addition as pp stated if she works more than 36 hours ( I believe) you have to have workers comp insurance.
Message edited 7/31/2013 2:40:31 PM.
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| Posted 7/31/13 2:39 PM |
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alli3131
Peanut is here!!!!!!
Member since 5/09 18388 total posts
Name:
Allison
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Re: Paying nanny off the books versus on, using FSA
Posted by secretlyTTCagain
Posted by alli3131
And technically youa re supposed to have Workers compensation insurance.
In NYS if you have one employee you are required toprovide the coverage. Now that being said.....no one does!
I am pretty sure the workmans comp is only if its 40+ hours a week. We tried so hard to do everything legally and by the book but didn't realize we needed workmans comp so we never got it. When our nanny filed for unemployment we got a letter that unless we could show proof (and they couldnt backdate it) we would potentially owe something like $30k in penalties. She only worked for us for 6 months! We nearly had a heart attack. Luckily I looked up the statute and saw the 40+ hour rule. Our nanny was part time and less than 40 hours a week. I am so glad we no longer have a nanny and don't need to worry about on the books v. off the books or complying with the various requirements
Part time employees are still considered employees for Work Comp.
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| Posted 7/31/13 3:23 PM |
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ElizaRags35
My 2 Girls
Member since 2/09 20494 total posts
Name:
Me
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Re: Paying nanny off the books versus on, using FSA
Posted by alli3131
Posted by secretlyTTCagain
Posted by alli3131
And technically youa re supposed to have Workers compensation insurance.
In NYS if you have one employee you are required toprovide the coverage. Now that being said.....no one does!
I am pretty sure the workmans comp is only if its 40+ hours a week. We tried so hard to do everything legally and by the book but didn't realize we needed workmans comp so we never got it. When our nanny filed for unemployment we got a letter that unless we could show proof (and they couldnt backdate it) we would potentially owe something like $30k in penalties. She only worked for us for 6 months! We nearly had a heart attack. Luckily I looked up the statute and saw the 40+ hour rule. Our nanny was part time and less than 40 hours a week. I am so glad we no longer have a nanny and don't need to worry about on the books v. off the books or complying with the various requirements
Part time employees are still considered employees for Work Comp.
True but if they are a domestic worker and work under 40 hours, you are not required to have WC Ins..
Domestic Workers & WC
Domestic Workers Hired by Individuals
Domestic workers include chauffeurs, nannies, home health aides, au pairs, nurses, baby-sitters, maids, cooks, housekeepers, laundry workers, butlers, companions, and gardeners working in a private household.
Domestic workers employed forty or more hours per week by the same employer (including full-time sitters or companions, and live-in maids) are required to be covered by a New York State workers' compensation insurance policy. WCL §3 Group 12
Workers' compensation insurance is NOT required IF the only people who work for the household are domestic workers in a private household who individually work less than 40 hours per week for that household. Time spent at the residence including sleeping and eating and any additional time spent off premises running errands and performing other duties for the employer count towards the total hours worked per week. Also included in the calculation of hours worked per week are all hours where the employer requires the domestic worker's presence. For example, if the employer goes away for two full days and requires the domestic's presence, this counts as 48 hours worked.
While not required, a person who employs household help for less than 40 hours per week is encouraged to obtain a voluntary workers' compensation insurance policy to protect both the employer and the employee.
Please note that a homeowner's insurance policy's workers' compensation insurance rider does not cover any domestic employees for workers' compensation benefits. Insurance Law §3420(j)
Message edited 7/31/2013 3:36:46 PM.
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| Posted 7/31/13 3:35 PM |
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Novemberbaby
LIF Infant
Member since 8/12 133 total posts
Name:
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Re: Paying nanny off the books versus on, using FSA
Yikes I didn't even know there was so much involved with hiring and paying a nanny.
Thank you ladies for the infom so much to think about for my lo care come September.
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| Posted 8/1/13 10:29 AM |
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Nifheim
allo
Member since 1/09 5476 total posts
Name:
Jennifer
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Re: Paying nanny off the books versus on, using FSA
it's incredibly annoying and expensive (as a person who owns a business) particularly if you only use very PT help and it's not a domestic situation.
I think though as an employer to do the right thing is the best thing. If you have a nanny being paid on the books they seem more "legit" to me and stable if they want to declare that income.
I am not saying just because they get paid cash they're evil people just means they're more into doing the right thing oppose to the most cash in their pocket thing. Plus nannies aren't required to be licensed or insuranced like daycare workers need to be. So I think a little bit of effort with getting the paperwork might be better overall unless you just need them a few hours a day.
I know I am in the process of getting workman's comp so i can hire assistants/secondary people for particular jobs which might only be 4-5 a year but I really like to do things the "right" way oppose to the easy way.
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| Posted 8/1/13 10:51 AM |
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