Before a family hires a nanny, the nanny’s compensation should be discussed and detailed fully, including any mileage reimbursement that may occur.
Mileage reimbursement rules apply to household employers who choose to let their nanny or other household employee use their personal car for performing their job duties. This includes running errands, picking up and dropping off children from school or other locations, taking a senior citizen to an event, shopping, or any other task that the employer asks the nanny to do which requires the use of his or her own car. Commuting to and from the family’s home is usually not considered reimburseable mileage.
In January, the IRS issued a new standard mileage rate for the year. This rate is used to calculate the deductible costs of driving a vehicle for business. The standard mileage rate for 2015 is 57.5 cents per mile for business miles driven, an increase of 1.5 cents from 2014. Most families use this IRS rate as the standard for reimbursing their nanny for mileage.
Some families may opt to reimburse their employee for gas expenses or provide them with a gas card, rather than compensation for mileage.
Any arrangements made between the employer and employee should be detailed in the Employee Handbook; it may be also useful to include a copy of an expense report to help both parties keep track of any mileage or gas used.
For more information about this or any other household employment issues, contact us at (888) 432-7972.