Understanding the Costs of Hiring a Live-In Nanny: A Comprehensive Guide

Introduction

Hiring a live-in nanny can be a rewarding solution for busy families seeking personalized and dedicated childcare services. However, it’s essential to be aware of the various costs associated with employing a live-in nanny to make an informed decision that fits your budget and meets your family’s needs.

We’ll delve into the key live-in nanny costs involved in hiring a live-in and explore factors that can influence these expenses.

Live-in nanny salary

The most substantial cost when hiring a live-in nanny is their pay. First, nannies are required to be paid an hourly wage versus a salary. Generally, a live-in nanny’s pay is no different than for a live-out nanny. The average hourly pay for nannies is $20. When determining your nanny’s hourly wage consider your local market rates and the nanny’s qualifications, experience, skills, and the number of children they will be caring for. To determine your live-in nanny cost per month, decide how many hours a week your nanny will typically work. Also, factor in any additional overtime pay you may owe.

Overtime pay for a live-in nanny

One benefit of a live-in nanny is that in most states, live-in nannies are exempt from overtime pay. According to the U.S. Department of Labor, live-in nannies, are exempt from the overtime requirements of the FLSA (Fair Labor Standards Act). However, it’s essential to note that they still need to be compensated for all hours worked, albeit at their regular rate of pay. That means your live-in nanny who works more than 40 hours a week can be paid at their regular hourly rate for any hours worked over 40 in a week.

Some states do not exempt nannies from overtime pay so if a live-in nanny exceeds a certain number of hours in a week or day, you will be required to pay an overtime rate which is usually 1.5 times their regular hourly rate. States that don’t exempt live-in nannies from overtime pay are California, Hawaii, Massachusetts, Maryland, Maine, Minnesota, New Jersey, Nevada, New York, and Oregon. Visit GTM’s state-specific information pages for household employers to see your state’s requirements. If you live in a state where overtime pay is required for a live-in nanny, figure out the average overtime you expect each week to calculate your costs.

Live-in nanny costs of additional benefits

In addition to the base pay, you may want to provide benefits like health insurance. Offering to pay for health insurance can assist with recruiting a nanny. Factor in these benefits when calculating the overall cost of employing a live-in nanny as well as presenting this to your nanny in their overall compensation package.

Another benefit that a live-in nanny receives is room and board. The value of the room and board should be included in the overall compensation package and can vary depending on the location and quality of the living space. Be sure to discuss and agree upon the specifics of the living arrangements with your nanny. Live-in costs associated with room and board are additional food that you may be providing that can be factored into your budget. Typically the family would cover the cost of the live-in nanny meals while on duty.

Live-in nanny taxes and insurance

As an employer, you will be responsible for withholding and paying taxes for your live-in nanny. This includes federal, state, and local income taxes, as well as Social Security and Medicare taxes. Additionally, some states require employers to provide workers’ compensation insurance for domestic employees. It’s crucial to familiarize yourself with the tax and insurance obligations to ensure compliance with relevant laws. Employer-paid taxes and workers’ compensation insurance are part of your live-in nanny costs.

Need help calculating your live-in nanny costs of taxes you owe?

Using GTM’s nanny tax calculator will help you to determine your tax responsibility for your live-in nanny.

Nanny agency fees (optional)

If you choose to hire a live-in nanny through a reputable agency, be prepared to pay agency fees. These fees typically cover the recruitment and screening process to find suitable candidates for your family’s needs. While hiring through an agency can simplify the hiring process, it may come with additional costs. An agency fee is a one-time cost.

Conclusion

Hiring a live-in nanny can be a valuable investment in your family’s well-being and work-life balance. However, it’s crucial to consider all the costs involved to make an informed decision that aligns with your financial capabilities and needs. Remember to account for the nanny’s wages and overtime pay, benefits, taxes and insurance, room and board, and any additional costs that may arise. Communicate openly with potential nannies about compensation and expectations to ensure a successful and fulfilling employment arrangement for both your family and the caregiver. With careful planning and consideration, you can find the perfect live-in nanny to provide quality care and support for your children.

GTM can help

When you employ a live-in nanny, you’ll be responsible for paying them accurately and handling employment taxes. This can be time-consuming and stressful for busy families. GTM Payroll Services can help you manage it all with automated payroll processing that includes direct deposit for your nanny (making payday an absolute breeze!), withholding taxes from your employee’s pay, and remitting all taxes to federal, state, and local agencies. It can be that easy! To learn more, call us for a complimentary consultation with a household employment expert at (800) 929-9213 or schedule time with us at your convenience.

Hiring a nanny?

Download Your Guide to Hiring a Nanny. In this guide, we lay out the steps on how to hire a nanny the right way and maintain a strong relationship with your employee.