When you employ a nanny or caregiver for your household, your household becomes an employer, and you must take care of all the legal and financial matters that come along with hiring a nanny. If you live in Canada and are in a nanny share agreement, read on to learn the steps of payroll calculations and processes families must perform in a nanny share situation.
Payroll for just one nanny and family can be a challenge, but nanny share can be an even longer process. Here are the main steps highlighted below, but take it one step at a time - it can get overwhelming!
Although having an easy paycheck or payroll calculator would be nice, navigating the waters of nanny taxes and payroll can actually be extremely challenging.
Feel free to give HeartPayroll the opportunity to take care of your payroll calculations for you, so you can rest easy. The HeartPayroll team are experts who will take care of all things payroll with your nanny like direct deposits, remittances and paystubs.
Technically one family can handle all of the payroll and taxes for the nanny but it is much better for each family to individually do their own taxes and payroll. One family could be penalized by the CRA for not paying their nanny (even if they send money to the other family). It’s also beneficial for each family to be registered as employers so that they can claim what they pay for the nanny on their income taxes under the childcare tax credit.
Below is an example of what the Code 1 and Code 0 breakdowns look like between two families and a nanny. Remember tax rates from year to year and vary by province as well. Keep in mind that this is not the exact tax and payroll breakdown you should pay - this is only an example!
|$1300 GROSS||ONE FAMILY - CODE 1||ONE FAMILY - CODE 0||CODE 1 + CODE 0|
The wage of the nanny can be split however the two families see fit, they can do a 50/50 split or if one family has two children, and the other one has one child, they may choose to do a 67/33 split. As long as all parties are familiar with the pay structure any split is appropriate for nanny sharing.
Does this process seem long and tedious? That’s because it definitely is - it’s easy to forget to file a remittance or make a mistake on your T4. Let our payroll experts take care of this problem for you so you can spend more time with your loved ones.
Our HeartPayroll team are experts at nanny taxes and amazing paycheck calculators. We are detail-oriented experts at HeartPayroll. Unlike My Home Pay, HeartPayroll has no registration fee and is a low-cost, all-inclusive service! Leave it to us. Future You will be happy you left payroll to the pros. Sign up today!