Holiday Bonus for your Nanny or Household Employee

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.