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A Conversation Guide
Provide your nanny with accurate information about the benefits and requirements of being paid legally
3 important reasons to get paid over the table
The US and state tax law establishes that nannies are employees and have a legal working relationship with a family, their employer. This creates an important distinction between an occasional babysitter and a nanny. Nannies are working professionals and should be treated as such. As a tax-paying professional, a nanny is entitled to the following benefits:
1. A legitimate employment and income history
Any time you apply for an apartment lease, student loan, car loan, mortgage, credit card, etc. you will be asked to provide documented proof of income and/or employment. A W2 and paystub from a company like Nanny Files will satisfy these requirements; a screenshot of your Venmo account will not.
2. Unemployment & other state benefits
If you lose your job for any reason - the family you work for moves away, the kids get older and don't need a full-time nanny, or something unexpected happens - you can claim unemployment benefits to cover your lost salary while you look for a new job. The only catch? Your employer needs to be paying employment taxes and contributing to a state and federal unemployment insurance fund. You will not be able to access these benefits if you are not being paid legally. The same goes for state programs like paid family and medical leave, short-term disability or maternity leave, or workers compensation insurance.
3. Retirement benefits
When you are paid on the books, you and your employer each contribute a small percentage of your paycheck to Social Security and Medicare. When you retire, the amount of retirement payout you receive is partially based on your length of employment history and how much was contributed to these accounts on your behalf. You work hard to earn your living and you don't want to cheat yourself of retirement earnings in the future!