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I’m Working a Nanny Share Job, Does Having Two Bosses Change Anything with My Payroll and Taxes?
Does having a nanny share job change my payroll and taxes?
When you work in a nanny share arrangement with two families, both families become employers. Presuming that each pay you for the work performed for their individual family, each employer is responsible for withholding nanny share payroll taxes and the periodic remittances of payroll taxes. Nanny share payroll taxes can be confusing, especially if the families are withholding your income taxes. A HomeWork Solutions’ household payroll specialist will be happy to discuss your situation with you and explain how payroll should be done for a nanny share.
Occasionally the non-host family (the family that does not have you working in their home) will try to rationalize treating you as an independent contractor. This is incorrect!
We consulted with Bob King, Esq., of Legally Nanny on the employment relationship between the nanny and the non-host family and he advises:
In most cases, both families are the nanny’s employer. The reason is that both families financially contribute to the nanny’s compensation, thus the economic reality is such that they are both typically considered employers.
Additionally, both families normally exercise a significant degree of control over how the nanny performs her duties. Even the family that sends their child to the other family’s house still has significant influence over how their child is cared for, what he or she is fed, activities, etc. This substantial level of control generally further indicates an employer/employee relationship.
Video: Payroll Taxes in a Nanny Share
We would like to point out another “relationship” issue that is created when Family A issues a W-2 and Family B issues a 1099. In this example, let us assume the weekly wage is $800, split evenly between the families. Family A will withhold 7.65% in Social Security and Medicare, netting the nanny $369.40 weekly. Family B will pay the nanny the complete $400, yet when you do your tax return, you will owe “self employment tax” of 15.3%, which is essentially the employee share of Social Security and Medicare and the employer’s share. So after taxes, you are netting $338.80. The only “winner” in this scenario is Family B – Family A is paying their employment taxes while Family B skips, and you are actually earning more from Family A than Family B. The financial relationship in a nanny share is very important, and this inequity could cause the share to fall apart.
Other Nanny Share Issues
Liability insurance, where to host if nanny cares for both family’s children together, coordinating vacation, dealing with sick children, dietary and discipline preferences, and notice for leaving the share should all be researched, discussed, and agreed to at the start of the relationship, and outlined in a three-way nanny work agreement.
Nanny share arrangements are also described in this Nanny Share Infographic.