Unemployment Benefits – Another Reason to be Paid On the Books By Stephanie Breedlove, Breedlove & Associates
No one likes thinking about losing their job. According to the latest employment figures, there are
approximately 2.5 unemployed people for each job opening nationwide – meaning there’s quite a bit of
competition out there. It’s a scary to imagine yourself in a position without a steady income wondering
when you’ll land your next opportunity. But if you’re a nanny that is paid on the books, unemployment
benefits can provide you the short-term financial assistance you need in between jobs.
You may not realize it, but families are required to pay federal and state unemployment insurance
taxes if they pay their nanny $1,000 or more in a calendar quarter (this threshold is lower in New York,
California and Washington, D.C.). These taxes go into a general fund used by each state to assist workers
that have lost their job due to no fault of their own – usually meaning they were not fired for cause
or quit. This happens frequently when a family moves or their children get older and no longer need a
nanny.
If you find yourself in this position, you’re eligible to make an unemployment claim through your state’s
unemployment office. A case worker will review your claim to determine the amount of unemployment
benefits you should receive. For most nannies, it will be 50% of your regular wages for up to 6 months.
This is a crucial benefit to have and nannies that are paid under the table won’t be eligible for it in
the short-term. If their employers catch up on their tax payments, these nannies would then become
eligible. But before that can happen, there would be back taxes, penalties and interest for both the
employer and the employee. The point is, it’s much cheaper to set up payroll correctly from the
beginning. We all wish taxes didn’t have to be taken out of our paycheck, but when you look at the
safety net they provide, it really should be a no-brainer.