{"id":305,"date":"2023-06-09T18:34:36","date_gmt":"2023-06-09T18:34:36","guid":{"rendered":"https:\/\/s37407.p1377.sites.pressdns.com\/homepay\/five-reasons-why-families-should-not-negotiate-caregiver-pay-on-a-net-basis\/"},"modified":"2023-06-09T18:34:36","modified_gmt":"2023-06-09T18:34:36","slug":"five-reasons-why-families-should-not-negotiate-caregiver-pay-on-a-net-basis","status":"publish","type":"post","link":"https:\/\/www.care.com\/hp\/five-reasons-why-families-should-not-negotiate-caregiver-pay-on-a-net-basis\/","title":{"rendered":"Five reasons why families should not negotiate caregiver pay on a net basis"},"content":{"rendered":"\n<p><span><span><span>When you\u2019re interviewing a nanny, senior caregiver or any other household employee, the topic of pay will inevitably come up. When that time comes, a tip to keep in mind is that pay should always be negotiated in terms of gross wages &#8211; the amount a caregiver earns before taxes are deducted. You may have heard other families or caregivers talk about negotiating pay based on what the caregiver takes home (net pay), but that route isn\u2019t ideal for a number of reasons.<\/span><\/span><\/span><\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large is-resized\"><a href=\"https:\/\/www.care.com\/homepay\"><img decoding=\"async\" src=\"https:\/\/www.care.com\/hp\/wp-content\/uploads\/sites\/3\/2023\/06\/HomePayAd-NannyTaxes-1024x386.png\" alt=\"\" class=\"wp-image-2137\" width=\"-207\" height=\"-78\" srcset=\"https:\/\/www.care.com\/hp\/wp-content\/uploads\/sites\/3\/2023\/06\/HomePayAd-NannyTaxes-1024x386.png 1024w, https:\/\/www.care.com\/hp\/wp-content\/uploads\/sites\/3\/2023\/06\/HomePayAd-NannyTaxes-300x113.png 300w, https:\/\/www.care.com\/hp\/wp-content\/uploads\/sites\/3\/2023\/06\/HomePayAd-NannyTaxes-768x289.png 768w, https:\/\/www.care.com\/hp\/wp-content\/uploads\/sites\/3\/2023\/06\/HomePayAd-NannyTaxes-1536x579.png 1536w, https:\/\/www.care.com\/hp\/wp-content\/uploads\/sites\/3\/2023\/06\/HomePayAd-NannyTaxes-1920x724.png 1920w, https:\/\/www.care.com\/hp\/wp-content\/uploads\/sites\/3\/2023\/06\/HomePayAd-NannyTaxes.png 2038w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/a><\/figure><\/div>\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p><span><span><span>\u201cThink about the job you have &#8211; when you accepted the position, you didn\u2019t talk to your manager or HR representative about the amount of money you\u2019d take home,\u201d says Tom Breedlove, Sr. Director of <\/span><a href=\"https:\/\/www.care.com\/homepay\"><span><span>Care.com HomePay<\/span><\/span><\/a><span>. \u201cThat\u2019s because in the eyes of the IRS and the tax agencies in your state, the amount of money you earn before taxes is your actual pay &#8211; not after taxes are deducted.\u201d<\/span><\/span><\/span><\/p>\n\n\n\n<p><span><span><span>If you find yourself in a position where a caregiver you really like is pushing for negotiating pay on a net, take-home basis, here are five ways you can explain to them why it\u2019s not in your\u2019s and their best interest:&nbsp;<\/span><\/span><\/span><\/p>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-1-payroll-and-taxes-must-be-reported-to-the-irs-and-the-state-in-terms-of-gross-wages\"><span><span><strong>1) Payroll and taxes must be reported to the IRS and the state in terms of gross wages<\/strong><\/span><\/span><\/h3>\n\n\n\n<p><span><span><span>Taxes are withheld from an employee\u2019s gross wages to determine their net pay. For most caregivers, these are:<\/span><\/span><\/span><\/p>\n\n\n\n<ul>\n<li><p dir=\"ltr\"><span><span><span>Social Security tax &#8211; 6.2% of gross wages.<\/span><\/span><\/span><\/p><\/li>\n\n\n\n<li><p dir=\"ltr\"><span><span><span>Medicare tax &#8211; 1.45% of gross wages.<\/span><\/span><\/span><\/p><\/li>\n\n\n\n<li><p dir=\"ltr\"><span><span><span>Federal income taxes &#8211; determined by how your caregiver fills out their <\/span><a href=\"https:\/\/www.care.com\/hp\/nanny-tax-forms\"><span>Form W-4.<\/span><\/a><\/span><\/span><\/p><\/li>\n\n\n\n<li><p dir=\"ltr\"><span><span><span>State income taxes &#8211; determined by how your caregiver fills out their state withholding form (assuming you live in a state with income taxes).<\/span><\/span><\/span><\/p><\/li>\n<\/ul>\n\n\n\n<p><span><span><span>Gross wages also determine the amount of household employer taxes you must pay and are used by federal and state government agencies to set wage thresholds and wage caps for those various taxes.<\/span><\/span><\/span><\/p>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-2-if-you-negotiate-a-certain-net-pay-changes-to-the-number-of-hours-your-caregiver-works-can-cause-under-payment\"><span><span><strong>2) If you negotiate a certain net pay, changes to the number of hours your caregiver works can cause under-payment<\/strong><\/span><\/span><\/h3>\n\n\n\n<p><span><span><span>If your employee\u2019s hours fluctuate, their gross pay needs to constantly be readjusted to maintain the same net pay. This means their hourly and overtime rates change constantly and could drop below federal or state minimum wage, depending on the number of hours your employee works. As a rule of thumb, your employee\u2019s gross pay should never decrease unless they are being demoted or their duties change.<\/span><\/span><\/span><\/p>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-3-federal-and-state-income-tax-rates-change-frequently\"><span><span><strong>3) Federal and state income tax rates change frequently<\/strong><span>&nbsp;<\/span><\/span><\/span><\/h3>\n\n\n\n<p><span><span><span>Income tax withholding tables at the federal and state level change almost every year. This does not affect your caregiver\u2019s gross wages, but for you to maintain their net pay, an increase or decrease in gross pay has to occur. Again, your caregiver\u2019s gross pay should never decrease unless their duties are changing.<\/span><\/span><\/span><\/p>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-4-an-employee-that-is-single-may-cost-more-to-hire-than-an-employee-that-is-married\"><span><span><strong>4) An employee that is single may cost more to hire than an employee that is married<\/strong><span>&nbsp;<\/span><\/span><\/span><\/h3>\n\n\n\n<p><span><span><span>When employees fill out their W-4, they claim deductions which tell their employer how much federal income tax to withhold from their pay. A single person with no children will have more income taxes withheld than a married person with children. This means that if both employees have the same net pay, the single person actually makes more money (and costs more to employ) than the married person when calculating each employee\u2019s true gross wages. An employee\u2019s personal life situation or choices should not impact your care budget.<\/span><\/span><\/span><\/p>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-5-gross-pay-shows-the-true-market-value-of-the-position\"><span><span><strong>5) Gross pay shows the true market value of the position<\/strong><\/span><\/span><span>&nbsp;<\/span><\/h3>\n\n\n\n<p><span><span><span>You\u2019ve just read that when two employees have the same gross pay, they can end up with completely different take-home pays depending on the amount of deductions they claim on their W-4. You\u2019re paying both employees the same, but the IRS and state determine that each employee must pay a different amount of income taxes throughout the year. This factor doesn\u2019t diminish the value of the work that each employee performs, but one employee looks underpaid compared to the other if you\u2019ve started with a net pay amount and \u201cgross up\u201d to account for taxes.<\/span><\/span><\/span><\/p>\n\n\n\n<p><span><span><span>If you currently pay your household employee on a net basis, visit our <\/span><a href=\"https:\/\/www.care.com\/homepay\/nanny-tax-calculator\"><span><span>paycheck calculator<\/span><\/span><\/a><span> to translate it into gross wages. If you get stuck, call us for a free consultation. We\u2019ll be happy to help so you can accurately track payroll and taxes going forward.<\/span><\/span><\/span><\/p>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p><span><span><strong>Next Steps:<\/strong><\/span><\/span><\/p>\n\n\n\n<ul>\n<li><p dir=\"ltr\"><span><span><a href=\"https:\/\/www.care.com\/hp\/nanny-tax-guide\"><span><span>Learn more about how taxes work for household employees<\/span><\/span><\/a><\/span><\/span><\/p><\/li>\n\n\n\n<li><p dir=\"ltr\"><span><span><a href=\"https:\/\/www.care.com\/hp\/nanny-tax-breaks-and-deductions\"><span><span>See how tax breaks can lower your care costs<\/span><\/span><\/a><\/span><\/span><\/p><\/li>\n\n\n\n<li><p dir=\"ltr\"><span><span><a href=\"https:\/\/www.care.com\/hp\/nanny-taxes-by-state\"><span><span>Read about the specific payroll and tax laws in your state<\/span><\/span><\/a><\/span><\/span><\/p><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>When families negotiate their caregiver&#8217;s pay on a net basis instead of a gross sum, it can create problems with their budget and taxes.<\/p>\n","protected":false},"author":1299,"featured_media":1007,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"enable_toc":false,"care_post_updated_flag":false,"care_updated_date":"","last_update":"2023-06-09","view_count":1444,"footnotes":""},"categories":[1],"tags":[],"member-type":[2],"vertical":[361,3],"platform":[11],"acf":[],"created":"2017-09-08","_links":{"self":[{"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/posts\/305"}],"collection":[{"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/users\/1299"}],"replies":[{"embeddable":true,"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/comments?post=305"}],"version-history":[{"count":2,"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/posts\/305\/revisions"}],"predecessor-version":[{"id":2201,"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/posts\/305\/revisions\/2201"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/media\/1007"}],"wp:attachment":[{"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/media?parent=305"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/categories?post=305"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/tags?post=305"},{"taxonomy":"member-type","embeddable":true,"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/member-type?post=305"},{"taxonomy":"vertical","embeddable":true,"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/vertical?post=305"},{"taxonomy":"platform","embeddable":true,"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/platform?post=305"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}