Nanny Survey 2008: Reporting Earnings to EDD
Archived Q&A and Reviews
19. Do you report your nanny's earnings to the California Employment Development Department (EDD)? (for state disability & unemployment insurance -- see http://www.edd.ca.gov/taxrep/de8829.pdf)
19.b. If you report some of the earnings, what percentage do you report? Is there a particular reason why you don't report earnings? If you report the earnings, please give us details (do you use a filing service and which one, etc.)? Was it hard to find a nanny who wanted to be paid on the books? Anything else people should know?
- "$5000/year, which is my Flexible Spending allotment. I use an accountant to do the books. Frankly, it's more trouble than it's worth and costs more (between added tax pmts from me and costs of accountant) that I might stop entirely next year."
"40 hours only, use GTM Payroll service, little harder to find someone to be paid on the books"
"40% reported. nanny didn't want to report full earnings, but she wanted to report part of it. i do it myself."
"50% no filing service, we do this on our own. it's doable with a little bit of work."
"50% are reported. she asked us not to report any of it, but we think it's important for her to have them reported."
"50%, per nanny request. use paycycle.com"
"50%. Frankly, it's a drag AND expensive. I believe in our tax structure, so I'm happy to pay into it, but it hardly seems affordable for working families."
"50%. i would prefer to pay 100% on the books. if we did, she would not qualify for low-cost health care (medi-cal?)"
"After the experience of being a Household Employer last year, our CPA advised against us continuing that with our current nanny. He advised to report how much we pay her at the end of the year on our tax forms with her social security number and advise her to do the same."
"call me paranoid, but i don't want the IRS or INS intercepting my responses"
"Do not report bonuses, though"
"do not use a filing service, was not hard to find a nanny who wanted to be paid on the books"
"Don't report simply because it works better financially for all of us AND primarily because since I work full time I don't need one other thing to have to schedule, write, be responsible for!"
"Due to strong anti-government sentiment on both sides (we don't want to support the war, among other things), along with wanting her to have as much as we can afford, in a manner that allows her to eke out a living, we are all cash. Everyone is happy with this arrangement."
"For the few hours we need childcare each week (one day -- 8), it was not worth all the work and expense to do this on the books. I researched it and found it easier to just not report it (or be able to write it off)."
"For three years, we reported it all via Paycycle, but when we cut back to just a few hours a week, we gave that up and now just pay our portion via cash. Her main family-employer reports."
"I do not use a service - I do all the paper work myself. When we told her we wanted to pay by the book, we increased her hours so she could meet her financial needs for a weekly take home pay."
"I have been a small business owner so don't find it too difficult to figure out the taxes, etc and file on my own. It was hard to find a nanny who was willing to be paid on the books, but the most difficult part was figuring it all out with a share family. In both situations we have done, we have paid 100% on the books and the other family has paid all or part in cash. That has worked well for the nanny since she is reporting income but not all of her income. And for us, since we wanted to report everything."
"I think that most nannies want cash. Our situation is new and we didn't fully discuss this, but should have. She works so few hours a week that I didn't even think about it."
"I used PayCycle to calculate paychecks and taxes due (www.paycycle.com). I've been extremely happy with the service. The "good" candidates didn't balk at having taxes withheld. The candidates who did weren't the ones I wanted to hire. If they're honest about taxes, I feel they're likely to be honest with me. When we employed a full-time nanny, she appreciated that she'd be able to use W-2s for credit applications, rental applications, be able to file for unemployment or workman's comp if necessary, and be eligible for social security (she's not that far from retirement)."
"I used paycycle.com to pay every two weeks, track vacation and sick time and end of year taxes. Our nanny wanted to be paid on the books because she wanted to bring her husband and children into the country."
"Just heard that it was hard to do, and I don't think we could afford to pay our nanny at her current rate and pay over the table."
"Most nanny's do not want to get paid "on the books". I assume most people will not answer these next questions for fear of liability."
"nanny has requested that we not report - we really want to, but have abided by her wishes, uncomfortably"
"Nanny wanted to be paid on the books as she doesn't want to break the law, nor do we. We report only half of her income though as it otherwise would cost us too much and would cost her too much. We do all the taxes ourselves."
"One of our 3 nanny-share families reports earnings because they are self-employed through a corporation, which administers payroll. Our family does not report because we have maxed out our child-care credit through our other child's preschool."
"only a part because we subsicibe to a certain amount of tax deduction, which we found out was not a benefice at the end. We did not realize how complicated it is to report her earnings. People needs to check before what it means, because it is not an easy task."
"Our nanny didn't want us to report it, and as this is a short-term situation, we didn't debate it."
"Our nanny prefers that we don't withhold, so we give her the equivalent of our tax contribution to use for her health insurance plus savings."
"Our preference was to hire someone who would be paid on the books but given the short turn-around time we had to hire someone, we lowered that priority and unfortunately gave it up."
"People should treat their nannies like they'd want to be treated -- as professionals providing an invaluable service. This means making sure they have disability insurance and social security contributions made in their name. We use paycycle.com, an online service that makes the whole payroll and employment tax payment very simple."
"Roughly 17% reported, though we report a fixed dollar amount ($5K). Dont use a filing service."
"She requested that she receive half of her pay reported (which the other family agreed to take on) and half of her pay unreported (which our family pays). The other family uses a filing service, but I don't know which one. Most of the nannies we interviewed did not want to be paid on the books. Those who did, also charged more, so there was a huge incentive for us to NOT hire them."
"She's not documented, so reporting could put her and us in jeopardy. She and her husband recently asked if we could start reporting using a TIN instead of SS # so they could get additional home loans, but we have not worked this out yet."
"The other family, who employs her for 35 of the 45 hours that she works a week does report her earnings."
"We guaranteed our nanny's hourly rate after taxes, so we report an hourly wage that is slightly adjusted so that her after tax wage is right."
"We have only reported earnings when we have been the "full-time" family in the nanny share. Now that we're part-time, we pay cash. Our nanny wants to be legitimate and have a work record because she's working to get a green card and eventually become a citizen. But it's also better for her and for us if she makes part of her wages tax-free. We originally went with a nanny who wanted to be "on the books" because my husband had a flex spending account that gave us pre-tax reimbursement on childcare."
"we haven't up until this point, but now nanny wants us to do her taxes including withholding income taxe from her pay. So I am researching this. It is very confusing and hard to understand."
"We just started with our nanny and will soon be paying in a way that reports part of her earnings. Reason being because we signed up for the Dependent Care Assistant Program (savings account pre-tax) before we came to realize that not many nannies are willing to be paid on the books. With the account, we are locked-in and cannot change our mind. If we didn't have the pre-tax account, we would just be paying all under the table because it makes the nanny happy."
"We know we probably should but our nanny was used to declaring as self-employed and we didn't want to make things more complicated, since she didn't."
"we offered to report earnings, deduct social security, etc. but she refused."
"We preferred to report 100% of her earnings, but the agency reported the rate we wanted to pay (including taxes) to the nanny. So the rate we could pay her was less than she expected. We couldn't pay all she wanted, so we split the difference by only reporting 20 hours and she accepted slightly less than she had hoped for."
"We report 100%, and she wanted that, so it's easy, worked great"
"We report 38% only for her own tax purpose so she and her kids can still be covered by Medicaid. I think to get Medicaid annual salary needs to be below $ 14,000 for 2007."
"We report 99% of her earnings on paycycle.com . Occassionally, we pay her cash because this is how she hides or has pocket money that doesn't get taken and immediately spent by her boyfriend."
"we report about 50% of earnings. this amount lets our nanny have enough cash every week, but still shows some income for her graduate school financial aid awards. we use ADP to process her pay checks and do the tax accounting."
"We report earnings that can be covered by our Dependent Care Savings Account (maximum $5,000 per year)"
"We report her normal weekly salary, but if she works a few hours overtime, we just pay by check and don't report it. So the vast majority gets reported."
"We report just the portion that covers the minimum wage and only 40 hours a week. I file the taxes on my own. It's not that tough but sort of difficult to do since it's only quarterly and I tend to forget how I did it the last time. Only 1 of 5-10 nannies I interviewed wanted to be paid on the books. Honestly, I didn't care but I'm glad I am paying taxes. Mainly since my nanny would receive disability if she really needed it. Also, she will get social security benefits later."
"We report only a portion so that we can take advantage of the FSA at my work, which allows me to save $5K tax free and apply it to childcare. Otherwise we might not report any. Not sure. We report $160 of the $202 - $250 she makes each week."
"We reported all earnings for several years, then stopped."
"We share our nanny with two other families. The family who initially hired her pays all the taxes, while the other families pay for her health insurance. The nanny only reports income from family who initially hired her."
"We tried to report earnings but had difficulty (impossible) to find a nanny who would be paid on the books. We even started the paperwork but she was going to leave once she talked to her accountant about what would happen and even when we were going to cover her "share" and our "share" of the tax hit."
"We use PayCycle on-line. It was a little difficult to find nanny to be paid on the books, but not terrible. It's more expensive, I think."
"We use paycycle.com ($20 a month) to calculate paychecks, file W2s, etc. It is *extremely* helpful -- we couldn't do this without it. We did find that needing to be "on the books" limited our candidate pool, but we're very happy with the nanny we found. We particularly feel good that if she were to be sick, injured or have a baby, she would qualify for CA benefits such as paid family leave."
"We would, but our nanny requested that we don't."
$900/mth That's what she requested.
50% -- reporting all is just too costly. As it is we pay $55K a year (in our after tax dollars). Use filing service for 50% reported.
50% at nanny's request.
50%. She wanted to be paid by the books at 50% and that was fine with us. We do it ourselves.
50%. It was extremely difficult to find a nanny who was willing to be paid on the books. The 50% thing was a compromise.
Breedlove is a great service. They have been superhelpful. This is the only nanny we have had that wanted to have her earnings taxed.
Don't report b/c can't afford it.
Don't report since nanny did not want to be paid on the books.
everyone we interviewed asked to be paid in cash
her preference she is not legal
I did report it but the paperwork nightmare that ensued was SO not worth it...I won't make that mistake again.
I didn't know that I needed to report her earnings to Cal EDD
I don't know what the main family does.
I figure it doesn't really matter since we hire the nanny for so few hours.
I have no idea how to do this and I think it would make my nanny much less likely to continue working for me if SHE had to report earnings (pay taxes).
I have not been able to find a nanny that wants me to take taxes out of her paycheck.
I'm not sure
if we had paid her on the books we would have had to pay her more. as it turned out we made just too much money to deduct our childcare expenses on our taxes.
It is hard to find a nanny that wants to be paid on the books. We decided to pay our nanny more than we had originally anticipated so that her take-home salary was what she wanted but we were still doing it legally.
It is REALLY hard to find a nanny that is okay being paid on the books.
Nanny didn't want income reported.
Nanny files her taxes as an independent contractor/licensed day care.
Nanny is US citizen but did not want to be paid legally. She was by far the best candidate so we hired her even though we had intended to pay legally.
Never heard of this agency
Not required to report earning for Au Pairs coming through Govt. approved programs
Our nanny asked us to report only a portion (50%) since we were not able to afford providing her health insurance and she still needed coverage through MediCal.
Our nanny is not legally in this country. It was hard to find a nanny who wanted to be paid on the books.
Our nanny is undocumented
our nanny specifically does not want to be paid on the books. She would lose the subsidized care/school she gets for her own kid if she reported her income.
Our nanny wants to be paid in cash and not have her income reported. It is pretty hard and also extremely expensive to find a nanny who wants to work part time and be paid on the books.
Our nanny wants to be paid under the table.
Our nanny was unwilling to be paid on the books.
Part of the reason we don't do this is that we didn't have time to look into how to do this/the details when our newborn was little...
Per nanny's request
per our nanny's request
Reason: She's illegal. We'd rather report her earnings otherwise but we don't want to get her in trouble.
report minimum earnings as she wants to qualify for scholarships at her 2 children's catholic school
She asked us not to report earnings.
she didn't want to because she wouldn't cont to qualify for medi-cal or sliding scale tuition far one son's special school.
She doesn't work enough hours to report.
She is an independent contractor.
She requested that we do not.
the agency reports earnings
the full amount of the starting salary is what we report. All raises have been under the table
The nanny is self employed and thus it treated as an independent contractor.
This is a temporary situation and she doesn't want us to report the earnings. It took us months to find this nanny and the last one told us she didn't want to care for our child because he was too much work.
Wasn't aware of this.
We are in the process of changing this from none to full.
We are trying to correct this. Our nanny is OK with being paid on the books -- we made sure she had her green card when we hired her -- but I was thrown off by the paperwork; almost enough to make me a Republican. We will likely end up going through a service. Several people we interviewed disappeared when we asked the green-card question.
We are working to change this with our nanny.
We cannot report her earnings as she is undocumented.
We didn't talk about it.
We don't report earnings at the nanny's request.
We don't report earnings because the Nanny has asked this of us.
We don't report earnings because we don't want to pay the taxes.
We found this nanny through someone who was to be working with her at the same time so we just did what they were doing. Our preference would have been to report.
We just arrived from Europe so I am not familiar with EDD.
We pay her less than would be required for annual reporting -- hours don't add up to enough over the course of a year.
we report 2/3s of her earnings. we don't report all because one of the families we share with could not afford the extra money. we only recently started doing any reporting.
We report approx 75% of the earnings. We use Breedlove & Associates out of Texas.
We report it on our taxes
we report the portion of the nanny's choosing
We simply told the nanny that our preference was that she be paid legally.
we use a nanny tax service. wanted this nanny b/c she wants to be paid above the table. so important to give people who care for our children the opportunity to have retirement benefits.
We use Breedlove. Being paid on the books was a bit of a challenge but overcome in the end as we felt strongly about it. The other families in our share do not report earnings.
We use Nanny Pay to help us calculate. It was harder to find a nanny who wanted to be paid on the books.
We use Paycycle.
We use paycycle.com. Our nanny wanted at least one of the share families to be on the books. Currently we both pay her on the books.
We would love to do this but we had difficulty finding a nanny who would agree.
we're planning on switching and reporting next year--we just didn't figure out how to do it for this year.
~85% We don't report overtime hours