Paying your nanny under the table

What does it mean to pay your nanny under the table? It’s an informal arrangement where an employer writes a check or gives cash to a nanny instead of using proper payroll. By doing so they avoid paying a payroll service, witholding taxes from the nanny, paying the employers share of medicare and social security … Read more

Nanny Workers’ Compensation Cost

Providing wage replacement and medical benefits to injured workers, workers’ compensation is also known as the “compensation bargain.” The benefit to the employer largely rests on the fact that workers may not sue their employer for negligence if a proper insurance policy has been purchased by the employer.

In Washington State, households (the employer) with less than two full time domestic servants (such as nannies, maids, gardeners and maintenance workers) are not required to carry workers compensation insurance.

While a relief for some households, others may wonder:

Should I elect to purchase workers’ compensation insurance?

If a household employee gets injured on the job, you may be personally liable for medical costs and lost wages. Protecting your assets is a concern to many employers, so what are your options?

http://lni.wa.gov/apps/riskclasslookup/details.asp?id=104

The worker would have $0.2112 deducted from their wages, while the employer would pay $0.8792/hr per hr worked. If your nanny works full time (2087 hours/yr) that would amount to an annual bill of $1834!

  • Option 2) Purchase workers’ compensation insurance policy from a private company.

If paying $1.0904/hr sounds high, you’re right. It’s likely this high because this risk class includes more injurious professions such as caretakers that “help with ambulating.” A quick look at L&I confirms the fact that this rate is similar to those of other physically demanding professions:

Try shopping around for workers’ comp policies. You’ll likely find a better rate.


  • Option 3: Go without workers’ comp. Most families feel uncomfortable with the risk but you’ll probably save a lot of money with this route.

Update: Part II

12/12/2019

After contacting a number of insurers about private policies and learning that they had never heard of such a product in Washington State, I reached out to Labor and Industries Small Business Liason office. Recall that households are considered a business in their eyes.

Is there a list of insurers that sell workers comp policies in WA state?

As a monopolistic state, Washington does not have a private insurance market available to purchase workers’ compensation coverage.  For the overwhelming majority of businesses, workers’ compensation can only be obtained through the Washington State Fund.

After they stated that large employers (assets > $25 million) sometimes self-insure, I wondered how the high rates of a WA State policy might decrease over time:

Can you tell me about how much the annual premiums decrease assuming no claims?

Premiums can decrease in two different ways.  There are annual rate changes that affect the base rate for each risk class, but these can increase or decrease the rate depending on the overall cost of claims across all workers in each particular class.  There is a medical-only discount, which is awarded to a business after three years of no compensable claims.  With one individual working for you, your experience factor could go down by 10% after that third year.

So, the only discounts that could happen in the first couple years would be if the overall base rate decreased when it is recalculated each year.  A personal discount could occur after the third year.

Bottom Line: With no private policy options available, families are stuck with paying nearly a dollar per hour in worker’s comp insurance, and can only hope for a 10% reduction in three years.

Seattle Summer Nanny

2019–

Western Washington’s snow has melted, the birds are chirping and summer is just around the corner. For most kids in the puget sound area, summer will come later than usual. The five snow days seen by Seattle Public Schools and others around the region have pushed school back to nearly the end of June.

For parents, this means a delay in finding activities and childcare for kids, but it also may interrupt prior plans for camps at the end of June.


A summer nanny can provide an extra hand to replace the structured school days whether the kids are in camps or need someone to facilitate keeping them busy.

Some of the best nannies come from local universities but not all of them can meet your families needs. Through years of recruiting, screening and hiring tutors from these universities, we’ve found a select few that also have exception childcare experience and references.


Summer Nanny Resumes

What are some of the skills and experience we look for in great nannies?

  • Exceptional references
  • At least one summer of childcare experience
  • Relevant Academic Interest, including:
    • Early Childhood Education
    • Psychology
    • Teaching
    • Nursing
  • Skills to keep kids busy during the summer
    • swimming instruction
    • lifeguarding
    • tutoring
  • Driving experience

Screening Process:

  1. Recruiting
  2. Reviewing resume and other materials
  3. Interviews
  4. Reference Checks
  5. Background Checks

Questions?

schuyler@seattlenannyservices.comcall or text: 206-817-8988

Nanny Unemployment Tax 2018

Disclaimer: This is an educational guide only and is not a replacement for a tax professional. Please speak with an attorney and accountant for further guidance. In spite of our best efforts, we do not guarantee the accuracy of this information.

Why should I care about payroll taxes, if I’m using payroll services?

The the IRS reminds us:

You’re responsible to ensure that tax returns are filed and deposits and payments are made, even if you contract with a third party to perform these acts. You remain responsible if the third party fails to perform any required action.

https://www.irs.gov/pub/irs-pdf/i1040sh.pdf

As a household employer, you’ll need to pay taxes on the wages and/or salaries of any employees.


One of the smaller components of payroll tax is the unemployment tax, a levy of concern to both the state (also known as state unemployment tax or “SUTA”) and federal government (federal unemployment tax “FUTA”).


Washington State Unemployment Tax:

For those of us in Washington State, you won’t need to pay state or federal unemployment taxes until you hit $1000 in wages/salaries per quarter. The Employment Security Department governs unemployment benefits and associated taxes paid by the employer. Questions specific to their divisions can be answered at 1-855-829-9243 or via a number of other contact methods: https://esd.wa.gov/employer-taxes/businesses-contact

How much is the tax in Washington State?

For new employers (the household is considered an employer) the estimated tax rate for “domestic services” would be 0.13%. So if your nanny’s annual gross wages are $35,000, that equates to only $45.50 per year. Nothing to worry about there–the important point is that you’re paying it so you avoid any penalties.




Federal Unemployment Tax

FUTA ends up being a modest tax due to a credit associated with unemployment taxes paid to the state. The FUTA rate is 6%, however employers typically receive a tax credit of 5.4%, effectively making it only 0.6%.

If you need more info about outsourcing your payroll duties, check out the IRS guide here.


Further Resources on Nanny Unemployment Taxes in Washington:

The WA ESD Handbook for Employers:

An FAQ produced by WA state ESD:

How much sleep do kids need?

Thanks to recent research from UW, we now have a better idea about how high school start times affect students. Biology professor Horatio de la Iglesia and doctoral student Gideon Munster recently released a report documenting their findings. By starting school an hour later, students gained half an hour of sleep, according to the researchers. And more importantly, the this extra sleep translated into the teenagers’ improvements in school performance and attendance.

The researcher’s publication can be found in “Science Advances.

Bellevue Private Elementary Schools

Bellevue Private Elementary Schools

Bellevue Private Elementary Schools Looking for a private school on the Eastside? Here’s a brief map guide for finding schools near you. Fortunately, Bellevue has a wide variety of schools from which to choose. While some of these schools center around elementary age students, many range from preschool to as late as 8th grade. Religious … Read more

Summer Activities

The sun is shining bright and school is nearly out. Parents often ask, What are good activities for kids to stay sharp with academics? There are lots of STEM summer camps these days. The most important thing for STEM related education is that kids find it accessible and exciting. Maybe your child like airplanes–check out the offerings at the Museum of Flight. The Pacific Science Center has always had a great selection of camps  which they offer at a variety of locations on the eastside and in Seattle.  And don’t forget to enjoy the nice weather–why not make a trip to the Colman Pool and enjoy the saltwater pool on the shores of Puget Sound.