You likely have an hourly rate in mind that you’d be comfortable paying a nanny or other household employee. When determining your budget, keep in mind your tax responsibilities that need to be paid on top of your employee’s pay. You may also need to pay for workers’ compensation insurance. According to federal law, household employees are non-exempt, which means they are paid an hourly rate and not a salary. Before negotiating your nanny’s pay, understand the difference between gross pay and net pay.
This is the pay for your nanny or household employee before taxes are withheld.
Sometimes referred to as “take-home” pay, this is the amount of money your employee receives after all taxes have been withheld.
You should make it clear to a potential hire whether you’re offering gross pay or net pay to avoid any confusion come payday.
Watch this brief video on how the difference between gross and net pay works out in real dollars.
Visit our Nanny Tax calculator to determine a gross pay and hourly rate for your employee that will generate a specific take-home pay.