We receive a lot of inquiries this time of year about holiday bonuses. The two most common questions we hear are: “What is the standard amount to give?” and “Is it taxable?”
To answer the first question, traditionally, holiday bonuses are between 1 to 2 weeks salary. If you can’t afford to provide 1-2 weeks salary, gifts such as a restaurant or spa gift card or a small token cash amount let your nanny know you appreciate her without breaking the bank. Additionally, since your relationship with your nanny is personal, the ultimate decision of what you give and how much you are comfortable giving is up to you.
For the second question, we turned to our friends at Breedlove & Associates, the industry leader in household employer taxes and payroll services. Breedlove advises that, “All bonuses and gifts are considered taxable compensation and by law must be handled like standard wages. Therefore, families should assume that their total cost of providing a bonus will be the bonus amount plus approximately 10%. For example, a $500 bonus would result in a total employer cost of about $550.” If you have any further tax related questions on this topic, please feel free to contact Breedlove at 888-273-3356.
Do you give your nanny or household employeee a holiday bonus? Is it in addition to or in lieu of an actual gift? We’d love to hear your thoughts.
We give a pretty nice bonus to our nanny each year as a gift. It’s more than 1 or 2 weeks of pay, but we can afford it and she’s worth it. She’s more than just a nanny to us, she’s family. In fact, I don’t really know what we’d do without her at this point – if she ever decides to move on it will be heartbreaking!
every year we give our nanny a cash bonus of 1 week’s pay and then we also give her a gift card to the spa (she deserves some pampering for putting up with our crazy kids
!!) and the kids usually bake her cookies and make her cards.
Our family does a small bonus that varies depending on what we can afford (we’re small business owners, so each year is different for us) and then we always try to do something extra in addition. Last year it was a gift card to her favorite restaurant, the year before it was a gift basket from Starbucks with a mug and coffee and a small gift card and some other goodies. Even though we can’t always give her the bonus we want, we try to make it apparent that we appreciate her caring for our kids!
I can tell you right now that she notices and appreciates the gesture – as a nanny, I think the most important part is just feeling the appreciation from your employer and having some sort of gesture made, whether it’s a homemade gift from the kids or a cash bonus or gift card from the parents. Being acknowledged for the hard work we put in is what matters most!
I agree with Sarah – it really is more about the parents acknowledging our hard work than anything. And homemade gifts from the kiddos don’t hurt either – I love getting cards or necklaces that the kids have made from me!
That’s interesting about the tax part, I didn’t realize that you were supposed to pay taxes on a bonus like that… Rookie mistake – we’ll definitely make sure we’re doing everything the right way from here on out!
We do a bonus in lieu of a gift and then the kids usually make a card that we put the bonus in (we do cash).