Why Nannies (and sitters) Must be Paid Legally

It is essential to pay childcare providers (nannies and babysitters) in compliance with federal and state labor laws to ensure that they receive fair compensation for their work. It is necessary to accurately report and pay taxes on wages paid to caregivers to avoid any potential legal penalties. Families are required to pay nanny taxes or employment taxes for household employees. The IRS defines household employees to include “housekeepers, maids, babysitters, gardeners, and others who work in or around your private residence as your employee.” In 2023, if your nanny will earn at least $2,600, you are obligated to pay Social Security and Medicare taxes. Also, by your nanny earning $1,000 or more in a quarter, federal unemployment taxes are due. Rhode Island also requires state unemployment tax be paid as well. Even if you have a part time nanny or a consistent sitter working 5 hours per week, they will still reach the tax threshold! The IRS estimates a typical family will spend 50 to 55 hours a year managing the taxes and compliance regulations of being a household employer! As a result, Peace of Mind Nannies highly recommends the use of a payroll company. We recommend HomeWork Solutions and GTM Payroll & HR to our clients since they are industry experts and will ensure that you are in compliance. Through our referral, families will receive competitive pricing on their services.

Having personally worked as a nanny, Founder, Tiesha Sinouthasy has experienced the benefits of being paid legally. Her pay has been consistent and directly deposited into her account! By having pay stubs, she has a legal employment history which is required when buying a car or home. Lastly, in the unfortunate scenario she gets hurt on the job (which has happened!), she’s eligible for worker’s compensation too. Paying nannies legally helps to safeguard their rights as workers and ensures that they receive the same benefits and protections as other employees, such as minimum wage, overtime pay, and workers' compensation. By providing legal pay, families create a professional and respectful working environment that benefits both the nanny and the family.