Being Paid “On the Books” Helps You Now and Later in Life
By Stephanie Breedlove, Breedlove & Associates
It’s no secret that I’m a big advocate for legal pay for nannies. My husband and I researched for hours trying to figure out how to pay our nanny “on the books” when my boys were little because there was no company like Breedlove & Associates to do it all for us. We just knew it was the right thing to do for our nanny because being paid legally has so many benefits. Some of these you may already know and some you may not realize until you need them.
Retirement Benefits
The main benefit of being paid “on the books” is that you are building credit toward your retirement. The Social Security and Medicare taxes withheld from your pay – and also paid by your employer – go into your Social Security account to be used for living and medical expenses with you retire. Most nannies will collect more than 4 times as much in Social Security and Medicare benefits as what they paid in taxes! That’s a great return on investment.
Loans And Other Financial Needs
One thing that is commonly overlooked when starting a new job is the need to provide proof of your employment. When you apply for a loan or other lines of credit, you are required to provide your past paystubs and/or tax filings. If you are paid off the books, it’s as if you don’t work or earn income. This makes obtaining that line of credit or loan virtually impossible and has even caused nannies to be turned down for home mortgages in the past.
A Safety Net Between Jobs
No one likes to think about being unemployed, but the truth is, kids grow up or families move and, at some point, most of us find ourselves being let go due to circumstances beyond our control. As long as you are not fired for cause or quit your job, being paid on the books will qualify you for unemployment benefits while you find your next job. Depending on the length of your employment and what state you live in, you can expect a safety net of up to 50% of your salary for up to six months. The benefits are paid to you by the state, which manages an unemployment benefits pool funded by employer taxes.
Help Those Being Paid Under the Table!
Unfortunately, we still have a lot of work to do to achieve our goal of ensuring that every nanny has the benefits and protections they deserve. That’s where I’d like your help. If you hear someone mention they don’t have taxes withheld, remind them they’re missing out on a lot of important benefits. Legal pay pays off – and we’re here to help!
it’s time to go after any and all agencies / Internet siites that post accept promot jobs that are paid off the books . Care.com gives an option of paying legally THIS IS NOT AN OPTION. This is the law .This also has to include jobs that pay less than minimum wage offering($5:00 an hour) that’s not even federal minimum we all know state is higher..Untill Paying on the books is the standard being a nanny will always be considered a casual industry , some thing you do unil some thing better comes a long . yes I am a nanny I am paid on the books and have been for over20 years .Thanks Louise
Another reason to pay into social security is to be eligible for disability should you ever need it. My father owned his own business and because he had taken a loss for 3 years, he wasn’t required to pay into ss. After a massive stroke at age 55, that left him unable to work, he was not eligible to collect disability because he had not paid anything into social security for the previous 4 quarters. This left him without income for 10 years before he could collect retirement social security.