With spring break and summer vacations coming up, many families will bring their nanny along to help care for the kids.  This always brings up interesting questions about how to handle the hours worked and travel expenses.

Even though it may be vacation to the family, federal law says it's work for the employee.  Families are required to pay for the nanny's travel, lodging and meal expenses and compensate her for all hours worked, including the time spent travelling as well as any time in which she has responsibility for the children -- even if she's doing it in a beautiful beach or mountain setting.

When hiring a nanny (or any other type of household employee), keep in mind that there are several forms of compensation that are considered "non-taxable" -- meaning neither you nor your employee would owe any taxes on that portion of the compensation.  By strategically structuring your payroll, you and your nanny can save thousands of dollars.  Here are the IRS-approved forms of non-taxable compensation:

HEALTH INSURANCE

Up to the full amount of her premium 

COLLEGE TUITION & BOOKS

Up to $5,250 per year towards tuition and books at an accredited college or university

PUBLIC TRANSPORTATION

Up to $230 per month for mass transit to and from work

PARKING

Up to $230 per month for parking at the job site

Taking advantage of the non-taxable forms of compensation is a great way to optimize your nanny's take-home pay without increasing your employer costs.  If you have questions or need help, let us know.