Paying family member for child care

[petersnm]

I'm expecting my first baby in about a month and am trying to figure out childcare once I go back to work after my 12 week leave.  I work from home but will need to travel to the home office (requires a plane ride) at least twice in the three months following my return. My partner and I plan to stagger our schedules somewhat to try to reduce the number of hours we'll need childcare (she works outside the home, but locally).  My sister is graduating from college in June and has expressed interest in being our nanny (once my leave is up).  I would LOVE for this to work out, but have a few questions and I hope some of you might have advice.

1) If I pay my sister hourly or weekly, etc. is it the same as hiring a regular nanny?  Do I need to take out taxes (state, federal, social security, etc.) or are there exceptions for family members?  Any idea if there's a state agency or something that would be able to answer these questions?

2) I read somewhere that with a regular nanny, you still pay the agreed upon wage, even if you (and the baby) are out of town.  Would this apply with my sister?  When I'm out of town for work (with the baby) should I expect to still pay her?

3) I live in St. Paul, MN -- does anyone know what going rates are for nannies here?  Obviously one of the benefits of hiring my sister is that she may be willing to work for less than a professional nanny, but I also want to be fair.  Is $10/hr reasonable?

4) Lastly, for other work from home moms, at what point did you find that you needed childcare?  I know some people work with their babies by their side for quite awhile, but I have to be on the phone/video skype a lot for meetings and am worried about interruptions.  On the flip side, we definitely need to save as much money on childcare for as long as possible!

Thanks so much for your help!

[Anna Phor]

I don't work from home, but my advice on #4 is--it depends on your baby! I could NOT have made that work with my child, but other kids are more content to hang out or sleep without tons of attention. 

The IRS has a number of publications on household employees--you could search their site, but if you have time, you might also call them. When I've done this in the past, I've spent a LONG time on hold (up to an hour) but once I finally got through to somebody, I have gotten very clear and accurate answers. They will be able to tell you if a family member is exempt from taxes, etc.

We have a contract with our nanny that states if we do not need her for any reason (grandparents are in town, we are on vacation), she still gets paid. She has the option to take annual leave, but we have a share so she can only do that if both families don't require her services. We pay her because this is how she makes her living and her bills do not go down just because grandma came to town! Whether or not you want to make this the practice with your sister is up to the two of you to negotiate, but I would most definitely recommend ironing out all of these details up front so that nobody gets any nasty surprises, and to avoid any hurt feelings. Other things you should think about--what happens if your sister is sick (my feeling is that if you don't give sick leave to a nanny, you are likely to end up with a sick nanny coming to work)? What about if she wants to take another job? Our contract has a four week notice period so that nobody is stuck without childcare on a Monday morning.

Not sure what the rate would be in your area--maybe check craigslist? 

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I wonder if you could look up something on a Nanny message board?  I have no idea if such a message board exists, but it seems like there should be one.  You could ask them what is the going rate in your area, and if they feel it should be paid even when the baby is out of town with you.

Could you bring your sister along on the trip?

[JudiAU]

If she is your employee, you are responsible for her taxes. Her relationship to you doesn't matter. Employeers who pay nanny taxes usually pay all of it. Of course, only a percentage of nanny employeers employee the taxes and many under report wages at their nanny's request. (Usually because health care caps etc. Most nannies pay little or no real federal wages but may need to qualify for certain programs.)  We use Breedlove, which is a service that handles everything. Sittercity.com will give you a good sense of salaries. In my area, experience legal nannies who drive a car the tot can be in safetly make $15-20/hr. I live in Los Angeles. Undocumented nannies who don't drive legally make less.

You should agree to her hours, schedule, and payment in advance. Most nannies are paid weekly, except for sick time or vacation time, regardless of your schedule. This is their job and their expenses are fixed, just like yours. If you know you are going to have some extra vacation time, you might want that know and figure out how to pay for it, i.e. paid, not paid, hours shifted.

Does your sister have experience caring for infants? That would be my primary concern. Family is great, but can be complicated. I'd hire someone who was experienced in my method of gentle parent rearing any day over a family member.