When calculating how your nanny’s paycheck fits in to your budget, it is important to remember mileage reimbursement. If you plan to have your nanny drive your kids regularly, it is important to remember that it will cost her money for gas, as well as maintenance. In most scenarios, your nanny will expect you to help pay for these things. So, what are your options?
Some parents prefer to provide their nanny with a car for the specific purpose of chauffeuring their kiddos around town. The parents are then responsible for gas fill up, maintenance, and insurance. The car belongs to the family, and stays parked at the family’s home while the nanny is not working. This is a great solution for a family that has a nanny with a drivers license and clean driving record, but no vehicle (or no vehicle that the parents want their children riding in regularly). It is also a great option for parents who have children in carseats, and a nanny with a small car.
Another, more affordable option is mileage reimbursement. The IRS issues a standard mileage rate to calculate the cost of gas and maintenance on a vehicle used for business purposes (read: driving kids around and running errands). This option is especially enticing because it is not considered taxable income, meaning neither you or your nanny will pay taxes on it. You will, however, have the added hassle of calculating and keeping track of the miles your nanny drives.
The last option is to estimate a flat rate for mileage reimbursement. If the amount of driving your nanny is expected to do week to week is fairly predictable, this option might be a good fit for you. Calculate the expected miles and use the IRS standard mileage rate to come up with a regular rate of reimbursement. It is important to discuss this with your nanny, and make sure that she is comfortable with the rate that you choose.
No matter what option you decide on, paying your nanny for her extra driving is important. It is also important to decide how you will handle this situation before you hire your nanny, and make it clear to her what is expected before hiring her.
APPS For Help Tracking Mileage