Hiring a nanny in Washington state

Hiring a nanny and paying above board is painful and it shouldn’t be! It is no wonder so many families just toss their arms up and pay under the table or feel they must hire someone to do this. I found the fees for hiring someone to pay our nanny cost prohibitive. If I can figure that out, more of my childcare budget can go to the nanny. There is some initial work the first few weeks, but after that with a simple spreadsheet it is repetitive and something anyone can do.

There are some great blogs out there of other parents who were frustrated with the mountains of information. They were able to figure it out and I am just stubborn enough that I will also figure it out.

• Dave Naffziger's Blog: Nanny Taxes -- Hiring a nanny in Washington State
• Pixel Theory: nanny tax how-to

The part that appears intimidating is just the sheer volume of information and weeding through that to find what you need to do for one employee. The DOR website and the IRS sites have lots of information for large companies who hire tons of people. I’m hiring one to work in my home, not a business.

For Federal taxes if you hire no more than three people to work in or around your home, you can pay the household employment taxes on your 2016 federal tax return. The IRS has a well written document on hiring a household employee: Publication 926 for 2016. This walks you through most of your questions regarding the federal requirements and reminds you if there can be state requirements. We are in Washington State. There are likely some similarities in other states, but the federal requirements will be the same for everyone.

The initial set-up is in the following steps:

1. Obtain an EIN through the IRS. (Federal requirement). Do not lose this number even if you no longer have a nanny! We hired a nanny in 2008 and my EIN is the same. They will not send you a duplicate of this information.
2. Apply for a UBI in WA state. (Business License Application).  For 2016 this is a $19 fee. (state requirement)
3. Ask your nanny to fill out an I-9 form. (Federal requirement). Keep this in your records.
4. Ask your nanny if she or he would like you to withhold taxes. (FICA). Per the 926 publication you should withhold federal income taxes (FICA) if your nanny wants you to. (You will still need to pay FUTA, SST and Medicare taxes).
   

   You aren't required to withhold federal income tax from wages you pay a household employee. You should withhold federal income tax only if your household employee asks you to withhold it and you agree. The employee must give you a completed Form W-4. (pub 926, page 8)

5. Report your new hire to WA state DSHS. You must have your federal EIN for this in order to report online. This also must happen within 20 days of the hire. 

Payroll basics

Now that you are set-up as an employer, you need to set-up your payroll for your employee. My nanny asked for a weekly paycheck. Do what works the best for your family and your nanny. I picked Thursday as a pay day so I had some time to get it done. I think this is more pertinent the first few weeks. We have a notebook where our nanny logs in and out. We tried an app, but she had to do a screen capture to send it. This works for our family.

I have a spread sheet to calculate the hours for the week based on the time card. IF your nanny opts to have his or her federal taxes withheld, this is a tiered calculation based on the pay cycle. Skim Publication 15. You can calculate the withholdings based on the percentage method or using the wage bracket method look-up tables.

I opted to use the percentage method, which meant I reference the “Percentage Method Tables for Income Tax Withholding.” Since we are paying weekly, I used the WEEKLY payroll period and built a big function based on Table 1, WEEKLY Payroll Period, into my spreadsheet. The other method would be to use the look-up-tables “Wage Bracket Method Tables for Income Tax Withholding.”

What taxes are paid and what shows up on the paycheck:

Social Security Tax (SST)	6.2 % of gross pay	Employee and employer
Medicare	1.45 % of gross pay	Employee and employer
Federal Unemployment Tax (FUTA)	6.0 % of gross pay (There can be some variation here)	Employer
Federal Income Tax (FICA)	See publication 15 for specifics, example FOR Single Person, weekly payroll percentage method OVER But not over Excess over $43 $222 $0.00 + 10% $43 $222 $767 $17.90 + 15% $222 $767 $1796 $99.65 + 25% $767	Employee

What does that table mean in FICA row? If, for example, our nanny earned $500 last week, the FICA tax withheld from her pay would be calculated as:

FICA = $17.90 + ($500-$222)*0.15

FICA = $17.90 +$41.70

FICA = $59.60

If I used the look-up table method and assumed 0 withholdings on the nanny’s W-4, the FICA would be $60.

There are a few other things that apply to us simply because it is so late in the year. Some of the income limitations could work in the nanny’s favor. SST and Medicare taxes are only paid if the employee earns more than $2000 in a year. Being that there are only a few weeks left in the year, our nanny will not need to pay this.

The FUTA tax is paid if the employee has earned more than $1000.  We have hit that one.

FICA is withheld on all income if the nanny (employee) indicates that they would like you to do so.

There you have it!

The dreaded question...

There are many articles that talk about the lack of support women in this country have when it comes to the decision to work or not to work. On some level, we self-perpetuate the myth that women should be able to have a career and a family. Companies don't have day care onsite, which they should. Companies don't push to offer more time off for a mom and a new baby, which they should. You have to fight to pump your milk someplace other than the bathroom because companies want to ignore that some of the employees will lactate.

I got the question today or perhaps it was a statement on my current life choice, "SO, does this mean you'll finally quit and stay home with the kids?"

Why is it a question only for woman? I have a Masters in Electrical Engineering and a career in semiconductors spanning twelve years. It is assumed that I will give it all up. Why do we as a country not find a way to better support women and families in the work place instead of assuming that half of our workforce should be at home.

Why wasn't the question, "So, will your husband finally quit and stay home with the kids?"

We don't know how to handle professional women. Period. Let's look at the latest CEO of Yahoo. She started the job six months pregnant. Should this be a major issue? At six months pregnant there was no way she was trying to hide it. However, investors panicked. Pregnancy should be viewed as good thing. It shows that this woman is healthy and young with lots of time to invest in the company. And let's be realistic, as a CEO day care costs will not be an issue. It's a little different for those of us lower down in a company, but somehow her pregnancy upset the business world.

As a professional woman, it is hard and it is even harder to connect with other women and feel like part of a community.

Going back to work with a newborn is hard. There is no ifs ands or buts about it. You don't want to leave your baby with someone else, but your do. Not to mention, if you do not have a good day care situation (another story for another day) it goes from hard to horrible. Maybe my job situation will change, there aren't any job options for me in a small town and my boss could tire of my working remote. Until that happens, I will continue to work.

Some quiet time

I am not posting as much as I used to. I'm not sure what changed, I definitely have things to say. I am feeling as if I am talking to myself these days. Perhaps it is working by myself that is doing it. I am spending so much time alone that I don't need to write notes to myself, too. I need to find an outlet that involves real people.

The Mysore Bird Sanctuary

We visited the bird sanctuary in Mysore. Here you get on a boat and float around the lake looking at the birds. I wasn't surprised when no one had to wear a life vest, but it was pretty obvious why you wouldn't need them when you saw the giant crocodiles.

Photos from Mysore

I really have to thank Renee for lending me her camera when I saw something and then letting me have copies of all the photos on her camera. Thanks, Renee!

This was some ladies selling flowers and fruit outside a temple in Mysore. We didn't go into the temple due to the lines of thousands of people. It was super crowded.


The grounds at the summer palace of Tipu Sultan.



Renee, Wes and I at the summer palace



The final resting place of Tipu Sultan and his parents.


A carpool.

Work Travel

I recently spent the last two weeks of July in India for work. On this trip we were able to get out to see some of the sites while there. I had some fantastic food, too.

This is our driver, Giri, who spent his Saturday driving us from Bangalore to Mysore. This photo overlooks the city of Mysore.

Giri is quite the tour guide. He will talk endlessly about the different sites and temples. He really enjoys sharing the beauty of his country and I wish I absorbed more of what he said.

There is SO much to see in Mysore. I really think you need a couple days just to take some of it in, but we had one very packed day.

The unfortunate problem I had was my camera battery died on the way to Mysore. Renee was nice enough to let me take photos with her camera when I really wanted a photo of something. She also gave me all of her trip images. I cannot thank her enough.

But, you will have to wait until I can go through the photos to post some of the beautiful pictures she took.


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My trip so far

I am in India for work. There's so much to look at and unfortunately very limited time outside the office. We spent a little time outside the office today to do some shopping. Mom will like what I picked up, which I will have to keep to myself for now. This family of four drove by on their motorcycle. There appear to be more motorcycles in Bangalore than cars, and no large cars by US standard.