W2 or 1099 for Babysitters
I am trying to make a decision around hiring my babysitter under W2 or 1099. Anyone have advice on how to make this decision? I'm learning that by law if you pay a caregiver $2400+ per year, you need to hire them as an employee. I paid via venmo this year under that amount, but next year I may be paying over $2400 to the same babysitter. If I want to start as an employee 2022, do I keep the same pay rate per hour even though more taxes get taken out so the net pay is less? Or switch to salary? The job is 25hrs/week, not full time. I am mostly single parent income, so I don't have a lot of wiggle room in my funds. What have others done? What is negotiable? What is ethical? Thanks!
Dec 28, 2021
Parent Replies
I think you'll find that most nannies/babysitters are paid cash. I think a big reason for it is the taxes. I've yet to hear of a situation where the IRS has come after anyone for it.
We have had two nannies and paid both above the table, taking out taxes and paying into SDI, etc. For me the ethical questions are around protecting your nanny/sitter if something happens and they can't work. Our first nanny had to be out for a surgery and collected disability for nearly two months, and our second nanny stopped working for us at the start of the pandemic and collected unemployment (which because of the pandemic supplement made up for her entire lost wages! she was also part-time) for a few months until she felt ready to work again. In both cases we could not have afforded to pay their salaries while they were out - in the first case we had to hire a replacement, in the second case we also lost income due to COVID - so I am very glad our nannies had coverage from the state. If you are on a budget, you can decrease the cost a lot by setting up a share with another family, we did this both times and it was great for our babies to have friends and obviously it made it affordable for us.