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Kathy Webb

Recent Posts

End of Year Nanny Bonus?

Posted by Kathy Webb on 11/27/12 8:17 AM

In the household staffing arena, it is very common for families to express their appreciation for valued service with an end of year monetary bonus. Household employers often have the following questions:

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Topics: nanny payroll, nanny bonus, nanny wage

Nanny Holiday or Year End Bonus

Posted by Kathy Webb on 11/19/12 6:33 PM
Q. Does my nanny expect a bonus? If so, how big should the bonus be?

A. Holiday or year end bonuses are OPTIONAL - and are reportedly paid by about half of our clients. So, where as your nanny might appreciate a bonus, unless it has been your practice to give one in the past she is not likely to EXPECT it. Bonus amounts are typically one, sometimes two weeks pay. For newer nannies, most families fall back on the one day for every month of employment, up to a week. So the nanny who started in October might get 3 days pay as her bonus.

Many families have employment contracts that obligate a bonus at the employment anniversary date - a retention bonus. When these arrangements are in place, there is often either no holiday bonus or a very modest one.

Q. My husband and I have not had raises in two years, and we went ahead and gave our nanny a salary increase on her employment anniversary date. We would like to give a bonus, but it cannot be as generous as last year. Is this a problem?

A. Your nanny hears the news and knows that economic conditions are not fabulous too. Most employees, not simply nannies, have adjusted their expectations downward, and most are happy to get any bonus. I recommend that you acknowledge this to your nanny. Something to the effect "Times are rough, and I wish this bonus could be as generous as last year's." Make sure you use the words to express your gratitude for the services your nanny provides; most professional nannies would agree that a financial bonus is nice, but the words sincerely offered are always remembered.

Q. Are nanny holiday bonuses and gifts taxable?

A. Yes. In the eyes of the IRS, there is no such thing as a GIFT between and employer and an employee. Anything of value given by an employer to an employee is considered compensation, subject to wage reporting and employment and income taxes

The only way to skirt the issues of reporting the gift or bonus on the nanny's W-2 is to give her something with a 'de minimis' value - something so small that it is administratively impractical to perform a valuation and include it in compensation. This absolutely rules out CASH and dollar-value gift cards, but might allow other small expressions of gratitude such as a framed photo of the nanny with her charges.

The IRS does not define 'de minimis' by any specific value. A business gift is considered 'de minimis' if the value is less than $25. Many employers use the same measurement - hence the holiday ham or turkey. Gift cards with a dollar value or 'cash equivalent', however, even under $25, would be considered compensation.

Any cash you give to an employee at any time - whether it's a salary, bonus, or holiday gift - must be added to the employee's W-2 income. As a cash equivalent, a $50 gift certificate or gift card is $50 of taxable income.
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Topics: nanny bonus

Paid Holidays for Nannies and Other Household Workers?

Posted by Kathy Webb on 11/15/12 1:00 PM

Household employers are not legally obligated to pay for ANY holidays or time off. It is true, however, that some baseline provision of paid holidays is a general expectation of household employees. Many nannies, especially those working without a written work agreement in place, worry about their income during the busy holiday season. Will they receive pay on holidays? Will they be paid for those regular days when they are not needed due to holiday travel or entertainment?

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Topics: nanny paid time off, nanny benefits

San Francisco Nannies Earn Sick Time

Posted by Kathy Webb on 11/13/12 8:18 PM

Household employers in San Francisco California have local, city employment ordinances they must comply with, in addition the California Wage Order 15, California EDD taxation, and Federal tax and labor law.

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Topics: california household employment

New York Extends Quarterly Nanny Tax Deadline

Posted by Kathy Webb on 11/1/12 9:49 AM

Household employers in New York directly affected by Hurricane Sandy have until November 14, 2012 to file and pay Quarter 3 2012 employment taxes via NYS-45. "Directly affected" is defined in the notice linked below.

There is no extension for NYS-1 withholding tax payment deadlines.

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Nanny Taxes - Women, Work and Money series...

Posted by Kathy Webb on 10/31/12 9:14 AM

Sharing with you an article prepared by a CPA as part of an October series titled "Women, Work and Money." The series is sponsored by a generous grant from the Jewish Women’s Foundation of New York.

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Topics: nanny payroll, nanny tax

ITIN Application Process Clarified

Posted by Kathy Webb on 10/30/12 4:13 PM

The IRS has issued interium guidance and a detailed FAQ on changes to the Individual Taxpayer Identification Number (ITIN) application process. An ITIN is a number similar to a Social Security number which is issued by the IRS to taxpayers who are not eligible for Social Security numbers but need a tax identification number for tax filing and other purposes. Household employees who are not eligible for a SSN are almost always aliens working without valid US work authorization. Families who hire these undocumented workers are in violation of US immigration law and are still legally responsible to report and pay all employment taxes.The IRS is making changes to the ITIN application process in response to documented tax fraud associated with these identification numbers.

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Hurricane Sandy and Nanny Payroll

Posted by Kathy Webb on 10/30/12 2:27 PM

A quick update for HomeWork Solutions' clients and their caregivers...

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Topics: nanny payroll

California Domestic Workers Rights Bill (AB889)

Posted by Kathy Webb on 10/4/12 4:29 PM

The California Domestic Workers' Bill of Rights, AB889, which passed through the CA legislature this September was vetoed by Governor Jerry Brown.

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Topics: domestic workers bill of rights, california household employment

State & Local Rules Apply to Nannies

Posted by Kathy Webb on 10/2/12 5:05 PM

Did you know that New York State requires that employers provide three paid days personal time per year to a nanny or housekeeper after one year of employment?

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Topics: nanny benefits, new york household employment, california household employment

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