While weighing all of the options for who is going to care for your new baby after your maternity leave is over, there are plenty of important things to consider. And of course, the health, happiness, and safety of your baby are right at the top of the list, but somewhere along the line, the cost of childcare usually pops up too. (Why is it that everything always leads back to money?)
If you've been considering hiring a nanny for your newborn in lieu of using another form of day care, then you've probably figured out that in-home care can be pretty pricey. But aside from the fees that your new childcare provider will charge per week or month, you probably haven't factored in the extra taxes that you will have to pay for having her, right? Can you believe there is actually something called nanny tax?
Because it does exist. If the salary you paid your nanny is $1,700 or higher in a year (anything around that number could probably be considered highway robbery), then you have to pay nanny tax to the IRS. Great. Just one more thing for pregnant women to get all stressed out over.
But even though there may be hidden costs involved, hiring a nanny is definitely still worth every extra cent. I mean -- if you are financially secure enough to be able to afford a nanny in the first place, then the added taxes shouldn't deter you for one second. I think it's pretty safe to say that any parent would probably prefer for their newborn to be able to stay in his/her own home instead of having to pack everything up and head out of the house to day care each day. The benefits and conveniences definitely justify the cost if having your own nanny is something you have the luxury of doing.
Paying nanny taxes may not be something that has any influence on your childcare decision at all; however, it is important to at least factor in the extra costs so you don't get blindsided when you go to your tax professional after the first of the year. The less surprises after a new baby arrives, the better. Trust me.
Will the nanny tax possibly make you change your mind about hiring one?
Image via Ethan Lundgaard/Flickr
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