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It might only be mid-spring, but summer will be here soon. When schools begin to let out for the summer, many families find that they need to make changes to their child care arrangements. It’s not too early to seek advice on handling different issues that arise when planning for summer household employment, so let’s take a look at some of the most common concerns.
Compensating a Nanny on a Family Vacation
Before a family hires a nanny, the nanny’s compensation should be detailed fully, including the rate of pay for attending family vacations. It is important for families to remember that their vacation time is not the same as their nanny’s vacation time. A nanny who travels with a family and performs work responsibilities should be paid accordingly. Before the vacation begins, outline exactly what the nanny’s job responsibilities will be during the trip, the hours she will work, and what personal time she will have.
A nanny needs to be paid for all travel time to and from the destination. All travel expenses should be covered by the employer. This includes flights, accommodations, meals, and any other travel-related expenses. A nanny needs to be paid her normal wages for all hours she is responsible for the children, but not for rest time as long they have appropriate sleeping accommodations, receive 5 hours of uninterrupted sleep in a row, and receive a total of 8 hours rest time in a 24-hour period. A nanny also doesn’t need compensation for any hours where she is free to go off on her own and not be responsible for the children.
Lastly, any weekly hours over 40 need to be paid as overtime pay (one and a half times the regular hourly pay). Some states have additional overtime laws that need to be followed – check your state’s laws here.
Wages for a Nanny’s Overnight Stay
Many families only use nannies for daytime child care, but as schedules loosen up during the summer, there may an occasion when the nanny is asked to stay over for a night or two. Regarding compensation for this circumstance, you could pay a flat rate for temporary nannies when they stay overnight. However, if a child is up during the night for more than an hour, the hourly rate would apply on top of the flat rate for each hour the child is awake.
Families should discuss the payment options with their nanny and make sure they are in agreement before the overnight stay begins. The nanny should keep track of any hours she is up during the night caring for the child.
Nanny Taxes for Temporary Summer Nannies
Some families don’t have regular nannies during the school year but just utilize one here and there as the need arises. Some of these families may then need more regular child care during the summer, whether it’s to drop off and pick up the kids from camp, or simply to provide care and supervision throughout the day. A question many families have is whether or not they have to pay taxes for a nanny that only works for them during the summer. “Summer nannies,” as they’re sometimes called, are subject to the same payroll and tax rules as any other household employee. If a family pays an employee more than $2,000 (2017) in a year, they must withhold Social Security and Medicare taxes. So even if the nanny is only employed for the summer, if she earns over $2,000 in that time, the family must pay her legally by paying employer Social Security, Medicare, and unemployment insurances.
While temperatures and extra expenses seem to escalate quickly during the summer months, the IRS has some good news for parents: Those additional expenses may help you qualify for a tax credit for summer child care!
Tax Credit for Summer Child Care
Here are five facts the IRS wants you to know about a tax credit available for child care expenses. The Child and Dependent Care Credit is available for expenses incurred during the summer and throughout the rest of the year.
- The cost of day camp may count as an expense towards the Child and Dependent Care Credit.
- Expenses for overnight camps do not qualify.
- Whether your child care provider is a sitter at your home or a daycare facility outside the home, you’ll get some tax benefit if you qualify for the credit.
- The credit can be up to 35 percent of your qualifying expenses, depending on your income.
- You may use up to $3,000 of the non-reimbursed expenses paid in a year for one qualifying individual, or $6,000 for two or more qualifying individuals to figure the credit.
For more information, check out IRS Publication 503, Child and Dependent Care Expenses.
Have more questions about household employment during the summer? Contact us at (800) 929-9213 and learn how we help clients not only with payroll and tax for their household employees but with all aspects of the working relationship.
