Talking about taxes is a hard conversation to have with potential or current employers. Here are some quick tips to help guide you through the conversation.
1. Know what you need to earn in gross (before taxes) wages to bring home what you need in net (after taxes) wages. Use Breedlove’s Employee Paycheck Calculator to run the number until you come up with the combination that works for you.
2. Know what it will cost your employer.
- Your employer will pay about 9 to 11% of your wages in employer taxes. Breedlove’s Employer Budget Calculator will give you a detailed breakdown of your employer’s taxes. It’s a good thing to print it out and give it to your employers during the conversation.
- Your employer can generally claim the federal childcare credit if you provided care to a child 12 or under and you provided care so both your employers could work or look for work. This credit will greatly reduce the amount of taxes they pay. If they have a Flexible Spending Plan from through their work place, they’ll save even more.
- If you pay your own health insurance premium, you can restructure your wage agreement so you and your employers both save money.
Confused? You’re not alone. The good news is that both Breedlove and Associates and 4NannyTaxes.com offer free consultations. Give them a call and they’ll give you an estimate of what it will cost your employers to pay you on the books.
Common Reasons Employers Don’t Pay Nannies Legally
“We can’t afford the employer taxes”
“We can’t afford to pay you what you need if you have taxes deducted from your check.”
This is rarely true. If it is, there’s a good chance they simply can’t afford a nanny. Bottomline – you want to work for a family that can afford and is willing to pay for your services. Don’t fall into the trap of feeling guilty or greedy for asking to be paid legally. It’s your right. And their responsibility.
“We don’t have the time to do all the work involved in taxes.”
Time and hassle are often bigger stumbling blocks than money. Suggest a full service tax firm. I recommend 4NannyTaxes.com or Breedlove and Associates. They both provide great service and client support.
Bringing It Up During the Interview Process
Nanny: I know many nannies don’t have taxes taken out of their checks. However it’s important for me as a professional caregiver to pay taxes on my wages. Being paid on the books lets me save for retirement, collect unemployment if my job ends, claim my income so I qualify for financing and build a reportable work history. Plus I feel it’s my responsibility to pay my fair share. There are tax breaks for employers that can lower the amount of taxes you pay. Sometimes by quite a bit.
Obviously, the above (and below) statement is written in my voice. The idea isn’t for you to sound like me, it’s for you to get a feel for how to present your argument.
Bringing it Up Once You’re In a Job
Getting to the Conversation
Nanny: David, I have something I’d like to talk to you about. It should only take about 5 or 10 minutes. Do you have time one evening this week after the kids go to bed?
Employer: What’s going on?
Nanny: There isn’t a problem. I recently took a class on nanny taxes and I’d like to talk with you about the information they gave us.
Employer: What did they say?
Nanny: I’d really like to talk with you at a time when we both can focus on the conversation. Would an evening this week work for you?
Employer: Well, Friday night would be the best.
Nanny: Great, I’ll plan on being here at 8:30. Will that give you time to get the kids to bed?
Employer: OK, that will work.
Nanny: David, like I said the other day I recently went to a workshop on nanny taxes. Being paid on the books will let me save for retirement, collect unemployment if this job ends, claim my income so I qualify for financing and build a reportable work history. After hearing all the benefits of being paid legally and thinking about my responsibility to pay my fair share, I’ve decided I need to begin paying taxes on my income. I know this wasn’t part of our original agreement and it will increase your childcare costs. However it’s important for me as a professional caregiver to pay taxes on my wages. I did some research and there are tax breaks for you that can lower the amount of taxes you pay. Sometimes by quite a bit. I printed out a summary of what it would cost.
– See more at: http://nannybizreviews.com/2011/08/how-to-talk-about-nanny-taxes/#sthash.wWORQxvt.dpuf