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Millennials, as a whole, are starting to have children, and since raising a child can be expensive, many Millennials choose to work and use childcare services for help. If you’re a Millennial and you’re interested in learning more about childcare services, then check out some of our thoughts below.
Millennials in the U.S.
- As of 2015, Millennials make of ¼ of the nation’s population.
- The oldest Millennials were 27 years old when the recession hit in 2007
- Millennials make up 1/3 of the U.S. labor force.
- 36% of millennial women have had children
- For 18-34 year olds, homeownership rate is 13.2%.
Children of Millennials
- 10.8 million Millennial households have children.
- Millennials account for 80% of the U.S.’s 4 million yearly births.
- Labor force participation amongst Millennial women with children: 61%.
- In order to keep achieving their career goals
- 69% of Millennials are willing to travel for work
- 68% are fine with relocating
- 54% are willing to hire a nanny or provide their children with childcare.
- 26% of Millennials increased the amount of time they spend at work after their children were born.
- Only 13% of Generation X parents did the same.
- The cost for a middle-income two-parent family to raise a child born in 2012 until he or she is 18 is estimated to be $241,080.
How to Find a Nanny
Due to high childcare costs, Millennials are likely to keep working after they have children. Here are the basics on how to find the right nanny for your child:
When Hiring a Nanny:
- Outline what you’re looking for:
- How many hours a week do you need a nanny for?
- What do you expect the nanny to do?
- What is your budget?
- Consider the use of a referral source
- Nanny Agency
- Most expensive option, but everything is taken care of (background checks etc)
- Online marketplace
- Ask for recommendations from people you trust
3. Give yourself at least a month to three months to find a suitable nanny.
4. When interviewing nanny candidates:
- Ask detailed questions about their prior experiences, disciplinary techniques, and how they plan to entertain and interact with your children.
5. Remember to perform a background check and to also contact their references.
How Do I Pay my Nanny?
When you hire a nanny, it’s important to remember that you will most likely have to file domestic taxes.
- Domestic taxes or “nanny taxes” are also referred to as employment taxes for household employees.
- Hiring a housekeeper, maid, babysitter, driver, or gardener counts as hiring a “household employee.”
- If you paid wages to a household employee of $2,000 or more for 2016, you will be responsible for paying both state and federal payroll taxes.
- You have to pay Social Security, Medicare and Federal/State Unemployment taxes.
- Failing to pay your taxes can result in steep fines and penalties.
- Paying your taxes provides numerous benefits to the caregiver
- Paying your taxes also protects you and your family
- Paying someone in cash doesn’t preclude you from having to pay taxes.
- Vital: When hiring a household employer, make sure to have them sign an I-9, and keep records of their employment and payments.
Are There Child Care Tax Credits?
- The Dependent Care FSA allows a person to use pretax dollars in order to pay for certain childcare expenses.
- Eligible expenses include housekeeper or nanny payments, daycare fees or other childcare related services.
- In order to qualify, your children must be under the age of 13.
- All eligible expenses must be tracked—which means paying your household employee legally, including remittance of all taxes to appropriate agencies—since a claim has to be filed for each expense.
- The Child Tax Credit allows as much as $1000 in tax credit for each qualifying child, depending on income.
- The child must meet certain qualifications.
- Child must be under 17 years of age
- There must be proof or records that you are their parent or legal guardian
- You must show proof of support (which means keeping track of certain expenses, such as nanny-related costs)
- You must show proof of residency and citizenship.
Conclusion:
Take care of the people who take care of you.
Failing to file taxes properly for your household can result in them not having access to social security or unemployment.
You trust your nannies and household employees with your most important assets: your loved ones, and your home. Treat them with respect, and all can benefit.