6 Reasons to Pay Your Nanny Legally

6 reasons to pay your nanny legallyIt may seem easy to just cut a check or hand over cash to your nanny each week for her services. You don’t have to deal with tax calculations, forms and the hassles that come with being an employer. Your nanny may feel the same way. However, that’s a roll of the dice – for both you and your nanny – and one that you may not be able to afford. Here are 6 reasons to pay your nanny legally:

1. Your Nanny Files for Unemployment

For whatever reason, you and your nanny part ways. Perhaps it didn’t work out or your kids are now in school so you don’t need a full-time caregiver. She now needs to find a new job and files for unemployment benefits to help during the transition period. But your state’s labor department has no record of your nanny holding a job. And why would they? You haven’t been paying unemployment insurance. A red flag is immediately raised and you can expect a call from your state with a hefty fine soon to follow.

2. Your Nanny Gets Hurt on the Job

Any number of injuries or illnesses can happen on the job. Some can be serious enough to send your nanny to her doctor’s office or even the hospital. The doctor asks how she got hurt. In retelling her story, she says it happened while she was working. Now there’s a workers’ compensation claim. You live in one of the many states that require household employers to carry workers’ compensation insurance for their employees. Of course, the workers’ comp board in your state has no record of her even being employed because you haven’t paid your nanny legally. Again, expect to be contacted by your state and prepare to open your wallet.

Workers’ compensation helps restore your nanny’s lost wages and cover some of her medical bills. Even in states where workers’ comp may not be required, it’s a good idea to have this protection.

3. You’ve Hired a “Less than Professional” Nanny

Nannies who take their jobs seriously likely won’t take your position if you plan to pay them under the table. They know the benefits of being paid on the books even if it means a little less in their paychecks each week. They have verifiable incomes and legal employment histories. They can receive unemployment, Social Security, and Medicare benefits. And now, the Affordable Care Act requires everyone to have health insurance or pay a fine. By being paid legally, your nanny may qualify for a subsidy when purchasing coverage through a health insurance marketplace.

This is the type of nanny you want looking after your children. Your chances of having a long-term relationship with a “professional” nanny are much greater than with one where joining together in tax fraud is the beginning of your association.

4. Your Nanny Sues for Not Withholding Taxes

Let’s say you and your nanny decide to pay off the books. She’s enjoying the extra money in her paycheck and so far you haven’t had any issues. However, she starts to understand what she’s missing. She can’t get credit or apply for a loan as she has no work history. She realizes she’s not saving money toward retirement. She sees other nannies enjoying these benefits. Now she wants to be part of it. So she sues you for not following the law.

5. You Incur Fines and Penalties for Not Following the Law

There are a number of wage and labor laws and regulations that domestic employers need to follow. Some may be bundled into the New York Domestic Workers’ Bill of Rights. Others fall under the Fair Labor Standards Act (FLSA), Department of Labor rules, or IRS designations. These rules designate how to classify an employee for tax purposes, pay your employee including for overtime hours, properly track hours, provide time off, pay a minimum wage, and more. Not following the law will get you in trouble with your state and possibly the federal government. They won’t hesitate imposing a fine or penalty for your missteps.

6. You’ve Invited an IRS or State Tax Agency Audit

Getting caught paying your nanny “under the table” in any of the above scenarios could also trigger an IRS audit. Now the government is looking through your tax returns to see what else you may up to. If you haven’t done anything else wrong, the audit could just be a hassle. But you still may need to pay back taxes or a fine for not legally paying your nanny. According to The Motley Fool, failing to pay employment taxes can cost on average $25,000 in penalties and interest.

Take the time to do it right. Or, even better, have someone do it for you and save yourself the trouble. You will have peace of mind and may be able to take advantage of tax savings through the Child and Dependent Care Tax Credit and your employer’s Flexible Spending Account.

For more information, contact us at (518) 348-0400.

Household Employers and the Trump Tax Plan

household employers and the trump tax planFollowing the presidential election, our friends at GTM Payroll Services took a closer look at the proposed tax plan by Donald Trump with specific focus on his plan for child care taxation. Here is what their analysis revealed:

Trump Tax Plan: What it Means for Domestic Employers

Trump’s proposal to help reduce the costs of child care could also impact how domestic employers pay their nannies. Many nannies aren’t paying federal income taxes or contributing to Social Security and Medicare because their employers pay them “under the table.” But could that change?

Trump Tax Plan to Cut the Costs of Child Care

Trump is proposing an above-the-line deduction that would be capped at the average cost of child care for the age of the child in the taxpayer’s state. An above-the-line deduction subtracts from a taxpayer’s gross income in calculating an “adjusted gross income” for tax purposes. Families making less than $500,000 annually and single parents making less than $250,000 a year would be eligible for the deduction. Stay-at-home parents and families that use grandparents for child care would also be eligible.

The deduction would apply to children under age 13 and is limited to four children per taxpayer.

All families – regardless of income level – would also be able to establish Dependent Care Savings Accounts (DCSAs). These would be set up to help pay for the child care of specific individuals, including unborn children. Parents and their employers can, in total, contribute up to $2,000 annually into a specific account. Any funds remaining in the account when the child reaches 18 could be used for education expenses, but additional contributions could not be made.

It’s unclear how the average cost of child care would be determined under Trump’s plan.

State-by-state costs vary widely. For example, Massachusetts has the highest annual cost for full-time infant care at $17,062 for center-based care and $10,666 for home-based care. Mississippi is the least expensive state for child care with an average cost for center-based infant care of $4,822 and an average cost of $3,972 for home-based care.

Will Trump Tax Plan be Incentive to Increase Legal Employment?

Trump’s proposed deduction could encourage more domestic employers to pay their nannies “on the books.” They obviously can’t take advantage of the deduction without reporting the amount they pay their employee.

This could then increase the amount collected in federal taxes from nannies (whose wages are now not being reported) and the amount paid into Social Security and Medicare.

Let’s break it down.

It’s estimated that there are one million nannies in the U.S. According to the National Domestic Workers Alliance, less than nine percent of nannies are paid legally meaning income taxes are withheld and both the employee and employer pay into Social Security and Medicare.
The average hourly wage for a nanny is $9.80 according to the Economic Policy Institute, which equates to an annual gross pay of $20,384. She would owe about $2,256.28 in federal income tax as well as pay $1,263.81 into Social Security and that same amount into Medicare. Her employer would also contribute that total to Social Security and Medicare.

If 910,000 nannies are paid “off the books,” (ninety-one percent of one million) that means there is more than $2.1 billion in unpaid federal income taxes and $4.6 billion missing in Social Security and Medicare contributions.

Nannies – like most taxpayers – take advantage of deductions and credits to lower their overall tax burden so the amount in unpaid taxes and contributions is likely to be slightly lower than our estimates.

A tax plan that incents more domestic employers to pay their nannies legally through deductions can offset this diminished revenue by increasing the overall tax base. More employees would now be “on the books” and paying taxes while both employees and employers are contributing to Social Security and Medicare.

GTM Payroll Services proposes that all domestic employers – regardless of annual income – be able to deduct wholly 100% of their child care costs from their taxable income.

This type of incentive would remove any remaining obstacles for employers to be fully compliant with household employment tax laws and add hundreds of thousands of domestic workers to the tax base who would pay billions of dollars in federal income tax and Social Security and Medicare contributions.

Voting Leave for Nannies

voting leave for nanniesWith 2016’s Election Day right around the corner, employers may not be aware of the laws regarding voting leave for nannies or other household employees.

While there are no federal laws that mandate employers to provide employees time off designated for voting, most states prohibit employers from taking actions like disciplining or firing an employee who takes time off work to vote. Some states require employers to allow a certain number of hours of time off so an employee can vote. And some states also require payment to employees for voting leave.

In New York, employers are required to give up to two hours paid leave to vote to employees who do not have four consecutive non-working hours between the polls opening and closing, and who do not have “sufficient” non-working time to vote. Employees must request the leave between two and ten days before Election Day. The employer may decide whether the leave is to be taken at the beginning or end of an employee’s shift. Employers must conspicuously post this rule in the workplace ten days prior to the election.

In general, most state voting laws provide that the employer:

  • May ask employees for written requests prior to taking time off for voting,
  • Can specify a time when employees are permitted to take voting time off,
  • Is not required to give paid time off (if voting polls open for at least two hours outside of an employee’s regular shift schedule),
  • May not include lunch/meal periods as part of the time off from work, and
  • May not be disciplined or retaliated against for exercising their rights to take time off and vote.

Some best practices for household employers to consider include:

  • Allowing your employee(s) requesting time off for early voting to do so just as you would for employees voting on Election Day,
  • Double-checking the voting leave laws of your state, and
  • Reminding your employee(s) about relevant policies and procedures

Contact us at (518) 348-0400 for more information.

Health Insurance for Your Nanny

health insurance for your nannyAnyone can be caught off guard by an unexpected illness or injury. Offering health insurance for a household employee benefits both the employee and the employer. Not only does it help employers with recruiting and retaining top quality nannies and other employees, but it safeguards against future health problems, minimizing surprise illnesses and the resulting absenteeism. For employees, having health care coverage limits out-of-pocket costs, protects assets, and safeguards future earnings.

More importantly, the Affordable Care Act (ACA) requires all individuals to have health insurance or risk being fined. The ACA can be complicated to navigate, especially within the realm of household employment. Here is a quick guide for obtaining health insurance for your nanny or other household employee.

First Steps

Before diving into the complex world of health insurance, there may be a couple of easier solutions.

  • How old is your nanny? Your employee may be able to be added to her parents’ policy if she is 26 years old or younger.
  • Is your nanny married? If so, it may be more affordable for her to be added to her spouse’s health plan, if the spouse is covered through their employer.

Obtaining Insurance

Individual health insurance plans can be purchased by:

  • Visiting your state’s health exchange or the federal exchange if your state does not offer one. See this list of states that have their own exchange.
  • Obtaining coverage directly through an insurance company, or by contacting a private exchange site.

Can You Cover or Reimburse Your Employee for Premiums?

If your nanny purchases coverage on a state or federal exchange, then by law, an employer may not cover or reimburse for premium payments. If your employee buys coverage through a private exchange or directly from an insurance company, then you can pay part or all of their premiums for them directly if they are your ONLY employee.

If you have more than one employee, you can set up a plan to help cover part or all of their premiums, and receive tax-free benefits. These plans include HRAs, POPs, FSAs, and HSAs. Through these plans, no taxes are paid by either the employer or employee on health care coverage.

Important Rules

  • Household employers that also own their own business may want to put their nanny on their business health plan. This is not permitted, because a nanny is not employed by the business – they are a household employee. Insurance companies will likely refuse to pay any benefits if you submit a claim for a household employee through a business insurance policy.
  • It’s also important to know that a household employee requesting individual coverage must apply for coverage themselves – the employer cannot submit an application or other paperwork on the nanny’s behalf. The employee must fill out the forms and submit their medical information.
  • If you as the employer are applying for a group plan, a group application must be completed by the employer and the employee must sign the enrollment forms.

Our affiliate GTM Payroll Services’ in-house insurance brokerage can guide you through the insurance rules and regulations in New York. For more information, contact GTM at (800) 929-9213 or get a free insurance quote.

New Deadline for Filing Your Nanny’s W-2

new deadline for filing your nanny's w-2Employers – including household employers – will need to file their employees’ W-2 forms much earlier next year than in previous years. The Protecting Americans from Tax Hikes (PATH) Act of 2015 was signed into law last December, and among the many provisions is a new W-2 filing deadline for employers’ 2016 forms. That deadline for submitting forms to the Social Security Administration (SSA) is January 31, 2017. That is also the date by which employees must receive their own W-2 copies, which means if there are any errors on the forms, there is no time to make corrections before they need to be filed with the SSA. It should be noted that these changes apply regardless of whether an employer submits paper forms or electronic ones.

The PATH Act also provides a safe harbor from de minimus (minor) error penalties, including relief of up to $25 for withholding errors and up to $100 for other errors.

Household employers that do their own payroll should begin preparing now for this new deadline, as the time frame in which to get any W-2s in order is now much shorter than it has been.

Using a company like our affiliate GTM Payroll Services, however, removes the burden from the employers. GTM’s service ensures their clients’ nannies and other employees get their W-2s on time, and that they get filed with the SSA on time as well.

Contact us at (518) 348-0400 for more information.

Do You Need a Non-Disclosure Agreement for Your Nanny?

nanny non-disclosure agreementIn the corporate business world, many companies require their employees to sign a non-disclosure agreement stating that any private and confidential information they come across must remain safe, as employees are privy to reports, policies, procedures, and other internal business-related communications. The world of household employment, while in a very different setting, is not so different when it comes to private information. So do you need a non-disclosure agreement for your nanny or other employee?

As a household employer, your employee has potential access to intimate and sensitive information. Whether it’s overhearing a conversation about finances, seeing a child’s medical records left on the counter, or being given the home alarm system code, your nanny must be trusted to keep information like this private and confidential both during and after their employment. Employers who are well-known in their community and those with celebrity status will be even more likely to make the employee legally bound to keep household information private.

While many employers will simply rely on good faith that their nanny or other employee will not violate that trust, some may wish for the security of a non-disclosure agreement. Such an agreement should be presented when the employee is hired, and should state clearly that the nanny is not to disclose any information pertaining to the household, whether she is on the clock or not. Households with multiple employees may also wish to state that workers may not discuss salary and benefit information with one another*.

* Under Section 7 of the National Labor Relations Act (NLRA), employees have the right to discuss the terms and conditions of their employment, including their work hours, work conditions, and pay. However, domestic workers are among the types of employee not included in this law.

Employers that decide to use a non-disclosure agreement should also include the consequences an employee will face if they violate the agreement by disclosing – or even threatening to disclose – private information. Such consequences could be getting a court order preventing the employee from disclosing such information, or preventing the employee from going to work for someone to whom they disclosed the information. Other consequences could include the employer having the right to claim losses and damages from the employee. Termination is another potential consequence for the employee’s breaking of the agreement.

A New England Nanny’s temporary caregivers sign an agreement with the agency to not discuss or disclose private information. Families that hire long-term caregivers need to create their own agreement if they choose. For more information, contact us at (518) 348-0400.

It’s National Nanny Recognition Week!

national nanny recognition weekThis is a very special week for caregivers across the country. It is National Nanny Recognition Week (NNRW)!

From nnrw.org: “NNRW is a week during which families, businesses, and the media are encouraged to focus on the positive aspects of the nanny profession, the important role nannies play in the lives of the families, and the wonderful contribution they make in the lives of the children they care for.”

Here at A New England Nanny, we would like to extend a thank you to all of the wonderful caregivers that work with our agency. And since we’re celebrating our 25th anniversary this year, we wanted to give special recognition to the caregivers that have been with us for a large part of that time!

Thanks and congratulations go out to:

Gail W. – 23 years

Bette R. – over 15 years

Charlene T. – 15 years

Joy K. – 13 years

Sue Z. – 13 years

Susan S. – over 12 years

Jennifer M. – 11 years

Tammy P. – 10 years

Lynn C. – 8 years

Ariel G. – 6 years

Marisa H. – 5 years

We appreciate the hard work and dedication that you and all of our caregivers have given to our clients and the children in your care over the years. Thank you!

Should You Offer Vacation Time or PTO?

vacation or pto for nanniesOne of the most common benefits that household employers offer their nanny or other employee is paid time off. This can be in the form of sick time, vacation time or PTO (Paid Time Off). Sick time is to be used in case the employee is ill or must care for an ill loved one, and vacation time is for the employee to simply take time away from work. But what is the difference between sick or vacation time and PTO?

Vacation policies are intended to be used for the specific purpose of vacation or leisure time, and employers who offer vacation time generally offer sick leave as well. The alternative to having two separate benefits is a singular PTO benefit, which may be used for any purpose the employee chooses.

Some states consider vacation and PTO (but not sick leave) to be accrued wages. Consequently, those states require payout of unused vacation and PTO at termination and have rules limiting use-it-or-lose-it policies. In New York, whether an employer must pay for unused time depends upon the terms of the vacation and/or resignation policy. So when you create a policy to offer vacation or PTO as a benefit to your nanny, you must decide whether the nanny will be paid for any unused vacation time or PTO hours should they leave the job.

While New York does not yet have a state law that require employers to offer paid sick leave, it is a national trend and such a law may come to New York soon. Should a paid sick leave law be enacted here and you decide to offer a PTO plan instead of paid sick leave, it is critical that you ensure the plan meets all the requirements of the mandatory sick leave law or ordinance. What household employers do need to abide by in New York is the state’s Domestic Workers’ Bill of Rights, which guarantees domestic workers at least three days of paid rest each year after one year of work for the same employer.

Regardless of which benefits you choose to offer, you’ll want to make sure they are clearly articulated in writing and that your employee(s) are made aware of what is available and how the policy or policies operate.

For more information, contact us at (518) 348-0400.

Is My Nanny an At-Will Employee?

nanny at-will employeeYes, nannies are at-will employees. In every U.S. state except Montana, employment is presumed to be at-will, meaning either the employer or the employee can legally terminate the employment relationship at any time, with or without notice, and with or without cause. The employer has not guaranteed employment for a period of time, and the employee has not promised to stay; therefore, either party can end the relationship without financial penalty. There are, however, exceptions and limitations to the at-will relationship, so employers should still be careful when terminating an employee.

When a nanny and a family sign a long-term agreement for employment, it is not a legally binding contract with regard to the exact amount of time the nanny will be employed. Rather it’s setting expectations for the employment relationship, and serves as a commitment the family is making to the nanny, showing that they want the nanny employed for the length of time designated by the agreement, but does not guarantee that length of time. However, if there is language in the agreement that states a nanny must give two weeks’ notice before leaving, and then the nanny quits without giving such notice, the agreement can be viewed as a legally binding document should the family wish to pursue legal action against the nanny for violating the terms of the agreement.

It’s important to keep in mind that at-will employment does not permit an employer to terminate employment based on the employee exercising a legal right or belonging to a protected class (e.g., race, sex, religion, national origin); such a basis would be illegal and could lead to a discrimination claim. Consequently, the safest way to terminate an employee is to have documentation that justifies the legitimate business reasons behind the termination. This documentation would include infractions of policy, instances of poor performance, and any disciplinary or corrective action taken. The more an employer can do to show that they gave a terminated employee the chance to improve, the better.

The bottom line is that while at-will employment makes it sound like you can terminate a nanny at any time, with or without notice, and with or without cause—and to a degree you can—legitimate and documented business reasons are always your best bet.

For more information, contact us at (518) 348-0400.

Nanny vs. Day Care: What’s the Right Option for Your Family?

nanny vs. day careAmong the multitude of decisions that parents have to make is, if necessary, what kind of child care they will need. Should they hire a nanny? Should they use a day care facility?

While it’s an important decision, it doesn’t have to be a stressful one if the parents understand the differences between using a nanny and enrolling in a day care. There are pros and cons to each, and all must be considered.

Here are the key differences between using a nanny and using a day care center.

Nannies

The Pros

When a family hires a nanny, they become the employer. They make the schedules, they decide on the duties that will be performed, and they provide specific instructions for the child’s care. They also negotiate the nanny’s salary and benefits, so they know the exact cost of using this kind of child care. Many families value having control over the situation; schedules can be changed as needed, and parents can ask the nanny to provide updates throughout the day.

Families with non-traditional schedules can hire a live-in nanny to care for a child in the evening and during the night. There are certain requirements a family must provide in this situation, such as a private place for the nanny to sleep with a bathroom. But for families that can accommodate one, a live-in nanny may be a good option.

Some families want their child to have one-on-one attention from a caregiver, which a nanny provides. The nanny can adjust their approach based on both your instructions and how the child reacts to different things throughout the day. There is no competition for attention; a child may form a real bond with their nanny, and some families consider that a key piece of the child care puzzle.

Having a nanny can mean less busy work for parents. Lunches and snacks don’t have to be packed in the morning; the nanny can handle getting a child dressed, something all parents know can be a laborious task. Winter weather can make it even more difficult to pack up and get a child out of the house; a nanny can handle that instead. Some families have their nanny do the kids’ laundry, light house cleaning, prepare dinner, or other simple but time-consuming jobs that a parent would be grateful to find done when they get home from work.

Families that hire a nanny through an agency have access to helpful child care resources, along with guidance and support from the agency, including back-up care should their regular nanny not be able to come to work.

Using a nanny for child care means families may be eligible to claim the Dependent Care Assistance Program (DCAP) or Child and Dependent Care tax credit, which can help offset some of the cost of the nanny’s salary and benefits.

The Cons

If a nanny calls out sick one day, or needs several days off due to an unexpected emergency, families that hire on their own (not through an agency) will need to find a replacement or take time off of work to care for the child. This can be disruptive for the parents, but also for the child, especially if they have started to form a bond with their nanny. Being dependent on one person for child care can cause these inconveniences.

Many families find nannies through online job boards; these nannies are not required to have any specific education credentials or certifications (such as CPR or first aid). A family searching for a nanny with all the qualifications they require can be time-consuming, and performing background checks becomes the parents’ responsibility. While there are legal protections for nannies in many states, there is no regulation process for anyone who wants to be a nanny; all the hiring decisions are made by the family.

Any family that pays a nanny over $2,000 (2016) in a year must also pay employment taxes; families must file all applicable nanny tax forms, Social Security, Medicare, federal and state unemployment insurances, and income taxes. Some states also require that a household employer have a workers’ compensation policy in case a nanny is injured or becomes ill while on duty.

Hiring a nanny means a family is now running a business with one employee. They need to negotiate salary and benefits, such as vacation and sick time, health insurance, and even retirement benefits. Families are advised to create a job description, a work agreement, and must ensure they are complying with applicable discrimination and harassment laws. Figuring out all the obligations of being a household employer takes a lot of time and effort (but using a payroll service like our partners at GTM Payroll can take all that off your plate).

Day Care

Pros

Day cares provide socialization for children that many families find integral to their child’s development. Children in day care learn about sharing, playing with others, interactional behavior, and other social skills. They make friends and develop relationships with their peers.

Many day cares bring in special instructors for art, music, or dance, and day cares usually have far more toys, art supplies, and playground equipment than any one family. Children get to know many of the day care staff, not just the teachers in their room, so that when there are substitutions it’s not stressful for the kids.

Many day care teachers have educational backgrounds in childhood education and/or psychology, so they can form a curriculum based on the children’s ages and maturity levels. Children in day care often come home knowing their ABCs, numbers, colors, and shapes.

Day cares run on a set schedule, and many of them are open past 5:00pm to accommodate families getting off of work. Many also open early, around 7:00am, to assist families who need more time in the morning to get to their jobs.

Day care center employees have been background-checked and screened. Many require that their teachers have a degree in an appropriate field, along with CPR and first aid training. Parents may find peace of mind knowing that day cares are state-regulated and subject to laws regarding teacher-child ratios, safety, and cleanliness.

Many day cares provide snacks, and some also provide breakfast or lunch, which means families don’t have to spend as much time getting food together in the morning. Children are often exposed to new foods and learn to try new things at day care, something they may be much more reluctant to do at home.

Families can help offset the cost of day care through the DCAP; this plan allows individuals to qualify up to $ 5,000 of their annual salary federal and state income tax-free.

Cons

While some families value the set schedule a day care provides, it can become an inconvenience if a meeting is going late and a parent can’t get to the facility by closing time. Day cares charge extra for late pick-ups, so it may be a struggle to balance work responsibilities and the day care’s hours.

Some children may find the stimulation at day care overwhelming; new faces, lots of new experiences, and perhaps more noise than they are used to. While day cares emphasize socialization, it may not be the right environment for a child.

More kids mean more germs. Children are more likely to develop colds and viruses in a group environment, and then they bring those germs home, which mean parents and other family members may find themselves getting sick more often than usual. If a child has a fever or vomits, most centers will require the child stay home until for at least 24 hours (or as long as it takes for the fever to go away); that means arranging other child care or staying home from work until the child is healthy enough to return. Day cares charge their regular rate whether the child is there or not.

Along with being closed on major holidays, many day cares close on various days throughout the year for professional development and training, or for religious holidays. On those days, if the parents still have to work, other child care arrangements will need to be made.

Day care centers sometimes have high turnover rates, so if a child forms a bond with one or more of the staff, they may struggle if those staff members leave.

The Costs

For some families, after considering all the pros and cons listed above, their decision about child care may depend most heavily on the cost.

Nannies

According to the International Nanny Association’s (INA) 2014 Salary and Benefits Survey, the national average hourly wage for nannies was $18.66, with some wages over $22 per hour. 62% of nannies surveyed received paid vacation time, and 12% received either full or partial health insurance.

If a family hires a nanny for 40 hours per week and pays the average of $18.66 per hour, the cost to the family would be $746.40 per week, or $38,812 a year. That does not take into account the costs involved with the hiring process; using an agency means paying a membership or placement fee, and hiring through an online job board means families will pay for background checks. Workers’ compensation and health insurance are additional expenses as well. If a family decides to use their accountant or a payroll service to handle the payroll and tax responsibilities, those are also additional costs to consider.

Day Care

The cost of using a day care center varies greatly from state to state, and changes based on the age of the children. In general, the older the child gets, the less day cares charge; some centers also give families a discount if they have more than one child enrolled.

For example, according to Child Care Aware of America, the average annual cost for infant day care in New York is $14,144; for an infant and a 4-year-old in day care, the average annual cost is $25,844. In Florida, infant care averages $8,694 annually, and $16,362 for an infant and a 4-year-old. In Illinois, the costs using the same examples are $12,964 and $22,531 respectively.

Additional costs need to be considered for using a nanny or babysitter when the day care center is closed or if the child is sick and can’t attend day care.

Ultimately parents know better than anyone else what is best for their family, both financially and emotionally. It’s not a decision to be made lightly, but having all the information and understanding the pros and cons to each option will make the decision a little easier.