Many nannies are on the go with their charges on a regular basis. Library story hour, sports, music lessons, and even the grocery store are common destinations. The nanny and the parents both need a way to communicate - from the mundane coordination of activities to the unlikely emergency. In this era of instant communication, virtually all household staff need a cell phone to meet the expectations of their employer and perform their job duties.
Recent IRS guidance makes it easier for families to provide the nanny or other household employee with a cell phone at employer expense or to reimburse nanny for reasonable expenses for her personal cell phone without triggering tax liabilities for either party. Prior to this ruling, employers had a requirement to segregate business use and personal use by the employee of the cell phone, and to report the value of personal use of the employer provided phone as income to the employee. This was an administrative burden few household employers were willing to assume. (See IRS Notice 2011-72)
So, what does the IRS consider business reasons or business use? They listed some possible scenarios, including:
- An employer needs to contact the employee at all times for work related emergencies.
- An employer requires that an employee be available to speak with clients or the employer at times when the employee is away from the office.