Nanny sharing and how it works
What is a Nanny Share?
Can a Nanny-Share reduce our child care expenses?
Nanny sharing is an arrangement between two families who engage the services of one nanny to care for their children. The families create the job description together and determine the nanny’s schedule, job duties and where the care will be provided (ie: which home and when).
Sharing a nanny with another family may be feasible when:
Nanny sharing can provide families with the best In-Home child care at nearly half the expense of employing a nanny on their own. A "Nanny-Share" can relieve both families of the difficulties involved with scheduling drop-offs and pick-ups from day care - and provide the flexibility and affordability you need.
- You and a local family each have a child for whom you want to provide in-home care
- Both parties are in agreement that having a nanny is the best option for child care
- Work hours are compatible and child rearing philosophies are similar
(pay attention to priorities, approaches to discipline, dietary preferences, etc.)
The benefits of a NannyShare include:
- Children are with friends/neighbors, not strangers or changing staff
- Much more affordable than employing a nanny on your own
- Similar in cost to day care facilities
- Ability to attract and hire an experienced nanny who would be unaffordable on your own
- ‘Best of Both Worlds’ in terms of child socialization and personal attention
- Fewer illnesses and infections compared to day care
- Much more scheduling flexibility than day care
- Complete control over dietary preferences for the children than a day care
- Children’s laundry and possibly some light housekeeping may be accommodated
- Care is provided to your specifications and preferences
- Professionally screened care provider when using a nanny agency
The challenges to a NannyShare may include:
Other items for the families to consider include evaluating the safety of the host home (is it childproofed, is there a pool), who pays for food and supplies used in the home, and establishing a 'point of contact' person for general questions or communication (so nanny doesn't have to contact two sets of parents every time she takes the kids to the park for example).
- Vacation scheduling may be complicated by the differing schedules of a nanny & two families
- Disagreements one family has with the nanny could affect the other family
- Families may develop differing preferences (such as appropriate TV viewing, homework, housekeeping, playmates and playgroups)
- Homeowners insurance may not cover an injury incurred by the 'non-resident' child
(It is recommended that the families enter into an agreement which includes a mutual liability disclaimer)
- If one family leaves the ‘share’ it may be difficult to partner with another family
Childcare Solutions has years of experience and will be happy to help you determine if you are a good candidate family for a NannyShare and then work with you to find an appropriate family to partner with in hiring a nanny.
Expert Advice from Breedlove & Associates
In order to make the hiring of an in-home nanny more affordable, many parents look to share the expense with another family. Here are some of the legal ramifications of this arrangement...
For the purpose of discussing legal obligations, a nanny-share is defined as two families sharing the expense of employing a nanny to care for their children as a group. The nanny and children may alternate between the two family homes, but care is provided to the children of both families as one job for the nanny. The nanny has two employers, each paying their agreed-upon share of her compensation.
If two families hire the same nanny to care for their children, but the care is provided separately, this is not a nanny-share arrangement. This is different because the children are not cared for as a group – the nanny works for one family at a time and the children are cared for in their home. In this case, the nanny has two part-time jobs.
How to Handle Payroll, Taxes and Tax Breaks in a Nanny-Share
In a nanny-share, each family is viewed as a separate household employer in the eyes of the law (even if the care is provided in only one of the homes). The nanny takes direction from both families, and both families share in the expense of her wages.
Each family is required to establish themselves as a household employer with the IRS and the state. The families should pay the nanny separately and withhold and remit payroll taxes appropriately to the IRS and to state agencies on their portion of her salary. Although it may seem administratively easier to have one family handle tax withholdings and remittance on the full salary, this creates risk for the family who is not registered as a household employer with the IRS and the state tax agencies. In addition, there is risk for the family who pays the nanny in full and then has to collect from the second family.
Tax Breaks Available When Both Families Pay Legally
Tax breaks are available when tax accounts are established with the IRS and the state to prove the nanny is paid legally. When each family is established as a household employer and is properly handling employer tax obligations on their portion of the nanny-share, they are entitled to a tax break of up to $2,500 per year. Most families in a nanny-share realize tax savings that far exceed their employer tax costs, so they actually come out ahead financially. For more information about tax breaks, see Dependent Care Tax Breaks or visit our Employer Budget Calculator for an estimate of your savings.
For detailed information on Nanny Payroll and Household Employer Taxes
contact Breedlove & Associates: 888-273-3356 / www.Breedlove.com
©2013 Breedlove & Associates, LLC
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