Childcare: For all of you who are a household of 2 working parents planning to have children, take note: It is expensive. Now of course, if it is worthwhile for me to stay at home, I would do it in a heartbeat. However, both my and my husband’s careers (and the length of time, sweat, resources, costs invested in our lifetime to get here) warrants that we continue to work, for the livelihood and longevity and ultimately the benefit of our family. So we continue to work… and thus, find appropriate childcare.
With one child, it was a relatively easy option: daycare seemed the best solution. We were fortunate enough that my mother-in-law was willing to care for our little daughter full-time until she was about 15 months. After that, although it was difficult to transition her (and me) into a daycare situation, it worked out… albeit, a bit more expensive than I hoped.
Then the rates went up the next year. Our little girl caught illness after illness (every 2-3 weeks it seemed) and had a chronically runny nose since the onset of daycare. Grandma took ill and had increased frequency of flare-ups of arthritis, so even part-time daycare wasn’t an option anymore.
And, well. I’m pregnant and about to have my second child.
With the greatest trepidation, I went into the daycare office for rates for infant care. We thought this was the best option as childcare in our home would be quite expensive. Then the quoted rates floored us. It would put us at least $500 per week for the care of our 2 children full-time in daycare, subject to poor teacher-kid ratios, cesspools of infections (which meant no sleep for parents when we get home and more medical bills), having to get up much earlier to get baby and toddler out and ready for daycare before work, and rushing to pick up in time afterwards. It sounded horrendous, at $500+ per week and more.
So while I was in the midst of mulling about it this summer, we ended up at a friend’s baby shower, and at length was discussing childcare. They were in search for a Nanny. At first I thought, Nannies? They’re SO expensive, and there’s so much involved in keeping one, plus safety issues with a stranger in your home?… But then I thought, well, maybe I should just try to research on the topic. I spoke my fears to my friends, and they said it’s more affordable than you think… if you pay under the table.
Pay under the table? Oh dear, I thought. There is one thing I hate – dealing with taxes and the IRS, and the ultimate slap in the face: getting audited. So I mulled about it some more. Then I spent a whole weekend looking into the whole ordeal.
I found out that Nannies have a huge range of salaries – usually from 350 per week to some ridiculous 1000 per week. It depended on the number of children, amount of time they spent on the job, and the location where they work (higher cost-of-living places of course cost more). I looked around my area, and found that nannies were willing to work for about $400-550 per week here, live-out (meaning they don’t live with you and drive to your house on work days), full-time for anywhere from 40-50 hours a week. This seemed manageable to me. So I looked further. I found that most families pay these rates without reporting it to the IRS.
I thought, well, maybe the Nannies would be willing to work as an independent contractor and would get a 1099 at the end of the year. That seems fair. So I looked it up. Site after tax-site stated, no, this is not allowed. The IRS classifies Nannies as household employees, and should be taxed as such. I thought, oh my, that would make me an employer, which equates to paying payroll taxes – something I’ve never done before. That would mean I would have to pay Worker’s Compensation insurance and have them expect employee benefits. Oh, no. No wonder Nannies are considered only for the super-rich and wealthy.
I thought – well maybe we scratch that. It’s too much of a hassle. So I planned on daycare.
Then my toddler soon after caught a terrible cold. I was pregnant and uncomfortable, so my dear husband stayed up with her night after night for 2 weeks. Loads after loads of vomit-filled laundry later, we decided… no. Daycare is not right for our newborn. I can’t have the baby going into flu and RSV season at that age. We should just bite the bullet and find a fabulous nanny, even if it means my husband and I eat Ramen noodles only for the next 2 years.
So the hunt began. I asked friends and family and posted it on my social site. I got one response: check out Care.com. I thought, oh thanks, that’s so helpful. I could have figured that out myself. I checked Craigslist for listings, then I saw a news report about another Craigslist scammer/murderer/thief, so I scratched that. I posted a job on Care.com and Sittercity.com. And believe it or not, a few people started applying for the job. They appeared to be decent, honest candidates, some with background checks already on file. So I decided to pay the nominal fee for the privilege of contacting these people on these sites, and the ball got rolling.
5 Interviews later, I was down to 2-3 very good top candidates, who were willing to work within our rates as a legal tax-filing employee.
Up front, I tell them that I plan on filing as a household employer, which means I pay taxes, and you pay taxes. I find that some Nannies do not like that – it means less net take-home pay for them – which also means under-the-table cash-paying families have an upper hand against me in the Nanny hiring competition. I think to myself, however, that in the end, I will find someone who’s willing to have some longevity with our family, because there will be no tax auditing horror stories with us. And there is no surprise (albeit illegal) 1099 filed to the Nanny at the end of the year, making her pay a whopping 15.3% tax (minimum) instead of 7.65% tax for social security and medicare taxes (as I have seen as huge complaints on nanny forums when she was expecting no tax filing at all). And she gets Worker’s Comp insurance. The trouble is getting the Nanny to understand, that in the end, I’m helping her pay for part of her taxes, worker’s compensation (injury insurance), and federal unemployment insurance (which means she’s truly compensated at a much higher rate), and the ones who understand are ultimately keepers. The ones that don’t — good luck filing for unemployment benefits, because if a family doesn’t pay those taxes, it wouldn’t be available to the nanny when she’s in between jobs. Plus, both of you get audited for back-taxes and penalties.
I’ve sent out an offer to a candidate so far. She seems the most capable, willing to work and take initiative, even in non-childcare related household duties. She has great experience, a clean background check and stunning references. She didn’t get squirmy when I mentioned Nanny Cams. She loves tomatoes and the frogs in my back pond (like me). She doesn’t smoke, and is always early to our meetings. She’s fine with getting recommended immunizations – yes including those supposedly controversial flu shots. She uses my ideal time-out disciplining technique. She is the highest rate I’ve offered among all the Nanny candidates that just squeaks by our budget after taxes and fees. I hope to hear from her soon. I even made negotiations to start her 1-2 months earlier than anticipated just to secure her position with our family. I hope those cash-paying families that she’s interviewing with don’t ruin my good intentions.
In the meantime, I am finalizing my 6-page work agreement detailing my thoughts about how the household should be run. Does this make me formidable? I certainly hope not. I’m usually a pretty reasonable person – at least my medical assistant tells me so! It’s easier this way — I believe, as everything’s outlined about our expectations right up front. For Nannies out there, I highly encourage you to get a work agreement from your employer family to figure out what they expect from the get-go, and for prospective Household employers, I urge you to write it all down on paper, so your Nanny can refer to it when she’s not sure what exactly her duties and expectations are as your employee.
Good luck to everyone who’s in the market to find a good Nanny. It is a lot of work up front, but it might still be a plausible option instead of daycare for your children.
One other tidbit – I found Breedlove & Associates to be absolutely wonderful. They offered a free consultation regarding payroll taxes up front and answered my questions well. Their payroll service fees are higher than some of the other payroll companies, but I’m going to use their services because of their knowledge and customer service. And no, I do not own stock in their company.