Nanny Tax
c_shah
years old daughter.
I am not sure about the tax consequences.
a) Do I required to give her a W2 or 1099? What are the advantages of
giving 1099 compared to W2?
b) Can I claim any deductions or tax credit for money paid to the
nanny?
If someone can clarify what kind of tax I need to pay to IRA or social
security. What kinf of forms I need.
Thanks.
--
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Arthur Kamlet
c_shah <shah....@netzero.net> wrote:
>My wife and I are planning to hire a nanny to take care of my three
>years old daughter.
>I am not sure about the tax consequences.
>
>a) Do I required to give her a W2 or 1099? What are the advantages of
>giving 1099 compared to W2?
>b) Can I claim any deductions or tax credit for money paid to the
>nanny?
If this work is done at the Nanny's house, then all you are
required to do is have the nanny fill out a Form W-9 and give
it to you and at the end of the year issue a Form 1099-Misc.
But if the Nanny comes to your home, she becomes your household
employee.
The IRS has issued a nice publication
http://www.irs.gov/pub/irs-pdf/p926.pdf
which covers all the work you have to do to comply with
the household employee laws. Part of that is filing
for am employee ID number, obtaining state-approved unemployment
insurance, paying for workers compensatuion, and filing Form 1040
Schedule H. See also the instruictions for IRS Form 1040
Schedule H.
http://www.irs.gov/pub/irs-pdf/f1040sh.pdf
>If someone can clarify what kind of tax I need to pay to IRA or social
>security. What kinf of forms I need.
--
ArtKamlet at a o l dot c o m Columbus OH K2PZH
removep...@yahoo.com
> c_shah �<shah.chi...@netzero.net> wrote:
> >My wife and I are planning to hire a nanny to take care of my three
> >years old daughter.
If both of you are working or looking for work, you can take the
dependent care tax credit. CA also has a dependent care credit.
> >I am not sure about the tax consequences.
>
> >a) Do I required to give her a W2 or 1099? �What are the advantages of
> >giving 1099 compared to W2?
> >b) Can I claim any deductions or tax credit for money paid to the
> >nanny?
>
> If this work is done at the Nanny's house, then all you are
> required to do is have the nanny fill out a Form W-9 and give
> it to you and at the end of the year issue a Form 1099-Misc.
>
> But if the Nanny comes to your home, she becomes your household
> employee.
>
> The IRS has issued a nice publication
>
> http://www.irs.gov/pub/irs-pdf/p926.pdf
>
> which covers all the work you have to do to comply with
>
> the household employee laws. � Part of that is filing
> for am employee ID number, obtaining state-approved unemployment
> insurance, paying for workers compensation, and filing Form 1040
> Schedule H. � See also the instructions for IRS Form 1040
> Schedule H.http://www.irs.gov/pub/irs-pdf/f1040sh.pdf>If someone can clarify what kind of tax I need to pay to IRA or social
Please confirm: The person hiring the nanny will not be able to take
a deduction for wages paid, their portion of FICA taxes, unemployment
insurance, and worker's compensation insurance.
Arthur Kamlet
removep...@yahoo.com <removep...@yahoo.com> wrote:
>
>Please confirm: The person hiring the nanny will not be able to take
>a deduction for wages paid, their portion of FICA taxes, unemployment
>insurance, and worker's compensation insurance.
Confirmed.
The amount allowed as child tax care is the income reported
by the child care provider.
--
ArtKamlet at a o l dot c o m Columbus OH K2PZH
--
Mark Bole
> On Jan 2, 9:27 am, kam...@panix.com (Arthur Kamlet) wrote:
>> c_shah <shah.chi...@netzero.net> wrote:
>
>>> My wife and I are planning to hire a nanny to take care of my three
>>> years old daughter.
>
> If both of you are working or looking for work, you can take the
> dependent care tax credit. CA also has a dependent care credit.
As usual, there are a lot more details than that. So I'll mention a few
key ones here:
It's not enough to be looking for work. Each spouse still has to have
actual earned income for the year (or one of them can be a full-time
student or totally disabled and claim "fake" earned income for just
those months as a student/disablee).
Also, the care provided needs to be directly in connection with the
work/job search/student status. Costs for care to allow the parents to
go out for dinner or on a vacation do not count, although presumably
there will be enough qualified expenses to get the maximum credit with a
near full-time nanny.
Speaking of which, this is one of the few federal credits that does not
phase out completely for higher-income taxpayers.
Now, a new question comes to mind: can someone hiring a nanny as a
household employee still use an employer dependent care reimbursement
account (W-2 Box 10) to help cover the expenses?
-Mark Bole
Mark Bole
> In article <5030fc24-e0ee-498a...@s3g2000yqs.googlegroups.com>,
> removep...@yahoo.com <removep...@yahoo.com> wrote:
>> Please confirm: The person hiring the nanny will not be able to take
>> a deduction for wages paid, their portion of FICA taxes, unemployment
>> insurance, and worker's compensation insurance.
>
> Confirmed.
>
>
> The amount allowed as child tax care is the income reported
> by the child care provider.
To get picky, wouldn't *all* the expenses, including payroll
taxes/UI/workers comp insurance, be allowed as qualified expenses? (not
just the wage income reported by the employee)?
In reality, the maximum allowed for the credit will probably be far
exceeded even without these extra expenses.
-Mark Bole
Arthur Kamlet
Mark Bole <ma...@pacbell.net> wrote:
>Arthur Kamlet wrote:
>> In article <5030fc24-e0ee-498a...@s3g2000yqs.googlegroups.com>,
>> removep...@yahoo.com <removep...@yahoo.com> wrote:
>>> Please confirm: The person hiring the nanny will not be able to take
>>> a deduction for wages paid, their portion of FICA taxes, unemployment
>>> insurance, and worker's compensation insurance.
>>
>> Confirmed.
>>
>>
>> The amount allowed as child tax care is the income reported
>> by the child care provider.
>
>To get picky, wouldn't *all* the expenses, including payroll
>taxes/UI/workers comp insurance, be allowed as qualified expenses? (not
>just the wage income reported by the employee)?
>
>In reality, the maximum allowed for the credit will probably be far
>exceeded even without these extra expenses.
You have to furnish the name/ein of the child care provider.
I would think (bad mistake) the amount reported by you would
have to appear as income on the recipient's tax return.
--
ArtKamlet at a o l dot c o m Columbus OH K2PZH
--
HLunsford
care credit.
--
Holiday ChEAr$!
Harlan Lunsford, EA n LA
HLunsford
>
>
> I would think (bad mistake) the amount reported by you would
> have to appear as income on the recipient's tax return.
Yes, one would think so and in a perfect IRS matching program any
mismatch would surface. But I've yet to encounter any exception that
IRS took to such a mismatch.
ChEAr$,
Harlan Lunsford, EA n LA
--
JoeTaxpayer
> My wife and I are planning to hire a nanny to take care of my three
> years old daughter.
> I am not sure about the tax consequences.
>
> a) Do I required to give her a W2 or 1099? What are the advantages of
> giving 1099 compared to W2?
> b) Can I claim any deductions or tax credit for money paid to the
> nanny?
I read through the replies. One important note; the federal system and
state can differ. For example, IIRC, the Federal taxes were submitted as
part of my own tax return, i.e. I squared away with the Feds in April.
The State taxes had to be paid to the state quarterly in the exact
amount I withheld.
The dollars didn't bother me, my objection was one of form. The IRS
would find much higher compliance if they offered a simple Nanny Tax
package, one that was published separate from other employer documents.
I found myself answering questions as though I were an employer of
multiple people, right down to paying into the unemployment system, etc.
For this issue (of a single household employee) it would also be great
if the state and feds matched up their process.
Good luck.
/Joe
Phil Marti
> I read through the replies. One important note; the federal system and
> state can differ. For example, IIRC, the Federal taxes were submitted as
> part of my own tax return, i.e. I squared away with the Feds in April.
> The State taxes had to be paid to the state quarterly in the exact
> amount I withheld.
<snip>
> For this issue (of a single household employee) it would also be great
> if the state and feds matched up their process.
Help is on the way. Washington hears you. Just hang on a little
while.
In my latter years at the IRS I became involved with the Simplified
Tax and Wage Reporting System (STAWRS) project, a joint effort of the
states, IRS, Social Security, and Labor to make life easier for all
employers. I think that project, or a successor, sends out periodic
encouraging newsletters. Of course, I retired 14 years ago, but I'm
sure any day now....
Phil Marti
Clarksburg, MD
HLunsford
>> if the state and feds matched up their process.
>
> Help is on the way. Washington hears you. Just hang on a little
> while.
>
> In my latter years at the IRS I became involved with the Simplified
> Tax and Wage Reporting System (STAWRS) project, a joint effort of the
> states, IRS, Social Security, and Labor to make life easier for all
> employers. I think that project, or a successor, sends out periodic
> encouraging newsletters. Of course, I retired 14 years ago, but I'm
> sure any day now....
>
c_shah
1099)
Can anyone confirm?
The process should be (please correct me)
She is a permenanat resident so I think I will be OK with I-9.
I need to get a tax payer identification number from IRS, withold
FICA and match my part of FICA and also pay federal and state
unemloyment taxes.
Do I need to deduct any income tax..? I doubt she will have any
taxable income at the year end?
How often do I need to send check to social security (once every three
months)..?
At the year end I will get $600 tax credit ($3000 *0.20 based on my
income) . This is bad... IRS should increse amount you can deduct for
child care from $3000 per child to something more realistic (OK you
know it cost much more than $3000/year for child care per year)
Does amount paid as FICA tax deductible..?
Phil Marti
> OK. Nannay will be coming to our home so I need to give her a W2 (not
> 1099)
>
> Can anyone confirm?
That's correct. Make sure you get her SSN at the beginning.
> The process should be (please correct me)
>
> She is a permenanat resident so I think I will be OK with I-9.
Not a tax law issue, but the last time I looked at an I-9 it seemed to
be pretty straightforward about what documents you must examine.
> I need to get a tax payer identification �number from IRS, withold
> FICA and match my part of FICA and also pay federal and state
> unemloyment taxes.
Yes to the ID number. Each of these taxes has its own income floor,
but assuming that you're liable for all, yes, you have to pay all.
Some household employers don't withhold the employee's share of SS/
Medicare and pay the full tax themselves. In that case the employee's
share is additional income (box 1 of the W-2) for income tax, but not
for SS/Medicare (boxes 3 and 5).
> Do I need to deduct any income tax..? I doubt she will have any
> taxable income at the year end?
Income tax withholding is voluntary on the part of both employer and
employee. Unless both want it, you don't have to do it.
> How often do I need to send check to social security (once every three
> months)..?
The only thing you send to SSA is the W-2. You will report and pay
all your Federal taxes on Schedule H of your 1040. Check to see
whether you'll have to make estimated tax payments or boost your
withholding--Publication 505.
> At the year end I will get $600 tax credit ($3000 *0.20 based on my
> income) �. This is bad... IRS should increse amount you can deduct for
> child care from $3000 per child to something more realistic (OK you
> know it cost much more than $3000/year for child care per year)
IRS doesn't make the rules. That's one for a letter to your members
of Congress.
> Does amount paid as FICA tax deductible..?
No.
Phil Marti
Clarksburg, MD
removep...@yahoo.com
> On Jan 4, 5:55 pm, c_shah <shah.chi...@netzero.net> wrote:
> > Do I need to deduct any income tax..? I doubt she will have any
> > taxable income at the year end?
>
> Income tax withholding is voluntary on the part of both employer and
> employee. Unless both want it, you don't have to do it.
Really? Could I claim a million exemptions at work and then just make
quarterly estimated payments, thereby earning additional interest?
> > At the year end I will get $600 tax credit ($3000 *0.20 based on my
> > income) . This is bad... IRS should increse amount you can deduct for
> > child care from $3000 per child to something more realistic (OK you
> > know it cost much more than $3000/year for child care per year)
Why should the IRS subsidize your child care expenses fully?
Mark Bole
>>> Do I need to deduct any income tax..? I doubt she will have any
>>> taxable income at the year end?
>> Income tax withholding is voluntary on the part of both employer and
>> employee. Unless both want it, you don't have to do it.
> Really? Could I claim a million exemptions at work and then just make
> quarterly estimated payments, thereby earning additional interest?
The question was about a nanny. Federal income tax withholding is
optional for household employees.
>>> At the year end I will get $600 tax credit ($3000 *0.20 based on my
>>> income) . This is bad... IRS should increse amount you can deduct for
>>> child care from $3000 per child to something more realistic (OK you
>>> know it cost much more than $3000/year for child care per year)
>
> Why should the IRS subsidize your child care expenses fully?
Of course, the IRS doesn't subsidize anything, the rest of the taxpayers do.
The question many non-separated parents face is, should one parent stay
home and provide tax-free (and wage-free) labor for child care, or
should both work and see a non-trivial amount of the 2nd spouse's
earnings go to others for child care. There is no right answer,
although tax law provides a partial offset for the latter choice.
For those with cooperative extended families, a grandparent or
aunt/uncle might also provide "free" child care.
-Mark Bole
Jonathan Kamens
>The dollars didn't bother me, my objection was one of form.
Indeed. My wife and I recently started employing a babysitter
for enough hours per week to force us into the twisty little
passages of the dreaded "Nanny Tax".
When, prior to that, nominee after nominee were embarrassed,
sometimes to the point of withdrawal from consideration, for
failure to pay the Nanny Tax, I was appalled. "What the heck
is the matter with these people?" I opined smarmily to my
wife. "Can't they handle the simple task of paying their
damn taxes?"
Only after I had to pay the Nanny Tax myself did I understand
just how convoluted, absurd and time-consuming the whole
process is.
Here's some of what you've got to do:
* Get an I-9 from the employee and keep it on file
* Teach the employee, who as a college student probably knows
nothing at all about taxes, that (a) her paycheck is going
to be less than hours x rate and (b) she may have to file
taxes because you're going to be reporting her income to
the IRS
* Pay your share of FICA
* Pay your share of Medicare
* Withhold and pay employee's share of FICA
* Withhold and pay employee's share of Medicare
* Get an EIN
* Figure out whether you're required to pay FUTA (convoluted
rules)
* If so pay your share of FUTA
* Figure out whether you're required to pay state
unemployment (convoluted rules, different from federal)
* Register with the state and get a state ID number (different
from federal ID number)
* Register with the state Web site
* Go through the state's convoluted process for figuring out
your premiums, which, given that you have only one
employee, are absurdly small and hardly worth the effort of
all the hassle of paying them
* Pay the state quarterly
* Figure out whether you're required to carry workers
compensation insurance (convoluted rules)
* Find somebody willing to issue you a puny workers
compensation policy for a single employee
* Provide your employee with the legally required
notification that you have workers compensation insurance
* Register with the SSA so that you can report your W-2 to
them online
* When the SSA Web site refuses to accept your valid EIN,
send them a fax and wait a week or so for them to get
around to calling you back
* Play the wait-on-hold-forever-with-the-SSA game after they
call you back and leave a voicemail message, to get your
SSA Web account activated
* Wait another couple of weeks for an activation code before
you can actually view your SSA filings online
* File the W-2 online with the SSA
* Give a copy of the W-2 to the employee
And that's without dealing with deducting employment-related
child-care expenses (I don't think the expenses are
deductible in our case, although there's some question there,
about which I will post separately).
All this, just to hire a babysitter for 11 hours per week.
It's just ridiculous.
Stuart A. Bronstein
>
> Indeed. My wife and I recently started employing a babysitter
> for enough hours per week to force us into the twisty little
> passages of the dreaded "Nanny Tax".
>
> just how convoluted, absurd and time-consuming the whole
> process is.
>
> Here's some of what you've got to do:
[long list of things]
> All this, just to hire a babysitter for 11 hours per week.
> It's just ridiculous.
There are services that will do all those things for you. They do
this involume for companies, so should be able to do it easily. I
don't now what the charge would be for an individual part-time
employee, but my understanding is that it would be reasonable.
--
Stu
http://downtoearthlawyer.com
Jonathan Kamens
>There are services that will do all those things for you. They do
>this involume for companies, so should be able to do it easily. I
>don't now what the charge would be for an individual part-time
>employee, but my understanding is that it would be reasonable.
Several points:
* It's simply unacceptable for the red tape surrounding hiring
a babysitter to be so onerous and convoluted that a family
would have to hire a service and pay extra money just to have
it done.
* I'd have interview several several services to determine
whether they are reputable and find the one which is going to
provide the best service for the most reasonable rate. I
imagine that this process would take just as long as the
navigating all the red tape myself, if not more.
* A little Googling reveals one company that charges a $100
enrolment fee, $170 per quarter, and $75 at the end of the
year; another company that charges anywhere from $450 to $1320
per year depending on which services you ask them to perform;
And a third company which charges $95 per quarter and $145 at
the end of the year. I do not consider any of these charges
reasonable. Perhaps if we were paying a full-time nanny they
would be, but given the hours and rate we're actually paying,
these charges are not noise, but rather a substantial and
excessive expense.
Another thing I neglected to point out in my last message is
this... I think I'm a pretty smart guy. I do my own taxes
every year, and (not withstanding my recent bloopers about the
AMT in this newsgroup :-) I think I understand how to navigate
red tape pretty well. I think the facts that I'm smart and
experienced with red tape are the *only* reasons why I'm able
to successfully navigate the morass of red tape surrounding
hiring a domestic employee. I'm pretty certain that most
people simply won't be able to get it right. This is not an
acceptable situation.
rick++
> My wife and I are planning to hire a nanny to take care of my three
> years old daughter.
Following the law does benefit the nanny too.
For every $1090 of income s/he'll get a social security
retirement and disability credit, up to four a year.
Young people prefer to pocket the tax money.
But when they are older they'll see this sacrifice
as useful.
removep...@yahoo.com
wrote:
> "Stuart A. Bronstein" <spamt...@lexregia.com> writes:
> * A little Googling reveals one company that charges a $100
> enrolment fee, $170 per quarter, and $75 at the end of the
> year; another company that charges anywhere from $450 to $1320
> per year depending on which services you ask them to perform;
> And a third company which charges $95 per quarter and $145 at
> the end of the year. �I do not consider any of these charges
> reasonable. �Perhaps if we were paying a full-timenannythey
> would be, but given the hours and rate we're actually paying,
> these charges are not noise, but rather a substantial and
> excessive expense.
Maybe you can drop the kids off a daycare center. I wonder if
nightcare centers exist, as you said the nanny comes 2 evenings a week.
Seth
Jonathan Kamens <j...@kamens.brookline.ma.us> wrote:
>When, prior to that, nominee after nominee were embarrassed,
>sometimes to the point of withdrawal from consideration, for
>failure to pay the Nanny Tax, I was appalled. "What the heck
>is the matter with these people?" I opined smarmily to my
>wife. "Can't they handle the simple task of paying their
>damn taxes?"
>
>Only after I had to pay the Nanny Tax myself did I understand
>just how convoluted, absurd and time-consuming the whole
>process is.
Do you believe that an _attorney_ who is unable to handle it (even by
just paying someone else to do it) is _qualified_ to hold a major
national policy-making position? I certainly don't.*
[many steps elided]
>All this, just to hire a babysitter for 11 hours per week.
That sounds like there should be a good business model: handling it
for others (to the extent that's possible without practicing law).
Seth
--
[*] I did find the whole process ludicrous: "We have a small list of
finalists. We chose one. Oops, she failed. Now we have an entirely
different small list of finalists. We chose one. Oops, she failed.
Now we have a third list of finalists, entirely different from the
first two." I have to believe that they knew who they wanted before
the list of "finalists" was created, and the others were just put on
the list to make it look good.
Seth
rick++ <ric...@hotmail.com> wrote:
>Following the law does benefit the nanny too.
>For every $1090 of income s/he'll get a social security
>retirement and disability credit, up to four a year.
>Young people prefer to pocket the tax money.
>But when they are older they'll see this sacrifice
>as useful.
Really? What good are those credits to someone who actually works for
a living as an adult?
Seth
Jonathan Kamens
>That sounds like there should be a good business model: handling it
>for others (to the extent that's possible without practicing law).
It doesn't work to offer this service to families who are just
hiring a part-time babysitter for two reasons:
1) The cost of providing the service is too high for them to
be willing to pay it.
2) Most of them are paying their babysitters under the table
and not bothering to do it legally in the first place. I.e.,
the market segment is too small.
The businesses that do this, are primarily doing it for
families that hire nannies for thousands or tens of thousands
of dollars per year. If you're paying a nanny $20,000 per
year, than $500 to handle his/her payroll doesn't seem like
that much, especially when people who hire nannies are busy
busy busy and willing to pay a pretty high price to save
themselves time and aggravation.
Jonathan Kamens
>Maybe you can drop the kids off a daycare center. I wonder if
>nightcare centers exist, as you said the nanny comes 2 evenings a week.
This is definitely getting off-topic, and perhaps it's time to
close this sub-thread, but (a) no, there are no daycare
centers I know of that operate at night, (b) have you looked
recently at how much daycare centers cost? (c) it is very hard
to find open slots in reputable daycare centers, (d) it is
even harder (read, pretty much impossible) to find reputable
daycare centers that can take a child for only a few hours a
week, (e) we have five kids, several of whom are too old for
daycare but none of whom are old enough to leave home alone
babysitting for the others, and (f) the reason why we need
child-care is because there are other things we need to be
doing, i.e., we don't have the time to be driving kids to/from
daycare centers.
It seems to me that in this newsgroup it would be appropriate
to stick to tax-related issues and reset the urge to offer
parenting advice to others.
Jonathan Kamens
>Really? What good are those credits to someone who actually works for
>a living as an adult?
Many nannies *are* "working for a living as an adult." Sure,
some of them are just nannying while biding time until
something better comes along, but for many, nannying is not
just a job, but a career. If they get paid under the table,
then it's a career that doesn't earn them social security
benefits (and makes their employers ineligible for Federal
office :-).
Seth
Jonathan Kamens <j...@kamens.brookline.ma.us> wrote:
>se...@panix.com (Seth) writes:
>>Really? What good are those credits to someone who actually works for
>>a living as an adult?
>
>Many nannies *are* "working for a living as an adult."
I was responding to, specifically, "Young people prefer to pocket the
tax money. But when they are older they'll see this sacrifice as
useful."
Someone who would have 40+ years of full-time adult employment
starting after being a nanny does not get any benefit I can discern
from those extra credits.
Seth
JoeTaxpayer
> Only after I had to pay the Nanny Tax myself did I understand
> just how convoluted, absurd and time-consuming the whole
> process is.
>
> Here's some of what you've got to do:
>
>
> And that's without dealing with deducting employment-related
> child-care expenses (I don't think the expenses are
> deductible in our case, although there's some question there,
> about which I will post separately).
>
> All this, just to hire a babysitter for 11 hours per week.
>
> It's just ridiculous.
Jon - I can't remember the last time a post here made me want to barf.
Your amazing summary brought back some horrible memories for me. For us,
it was a DCA (dependant care account) reimbursable expense, up to the
$5000 limit, anyway.
Phil suggested this was on the IRS to-do list. I hope they get to it. I
know "too hard to understand" is not a valid excuse, but compliance
would go up ten fold if it were a simple process.
Joe
Jonathan Kamens
>Someone who would have 40+ years of full-time adult employment
>starting after being a nanny does not get any benefit I can discern
>from those extra credits.
I suppose that's true, but personally, I consider "not
violating Federal and state law by being paid under the table
to avoid paying taxes" to be beneficial.
bill...@weacca.com
wrote:
> JoeTaxpayer <JoeTaxpa...@comcast.net> writes:
>
> Only after I had to pay the Nanny Tax myself did I understand
> just how convoluted, absurd and time-consuming the whole
> process is.
>
>
I think that you missed responsibilities under the Personal
Responsibility and Work Opportunity Act. And remember this is just
to get started. Then you have to also consider compliance with state
and federal wage and hours rules--- consecutive hours of work, meal
(and other) breaks, overtime, timely payment of wages, etc. In my
experience, what's really hard is complying with state law, which
tends not to be nearly as well explained, and which isn't covered by
anyone in their articles on compliance.
Bill.
Seth
Jonathan Kamens <j...@kamens.brookline.ma.us> wrote:
>se...@panix.com (Seth) writes:
>>That sounds like there should be a good business model: handling it
>>for others (to the extent that's possible without practicing law).
>
>It doesn't work to offer this service to families who are just
>hiring a part-time babysitter for two reasons:
>
>1) The cost of providing the service is too high for them to
>be willing to pay it.
All we've seen is that the charge for providing it is high, not that
the cost is.
>2) Most of them are paying their babysitters under the table
>and not bothering to do it legally in the first place. I.e.,
>the market segment is too small.
Maybe if there were an inexpensive way to do it legally, more people
would.
>The businesses that do this, are primarily doing it for
>families that hire nannies for thousands or tens of thousands
>of dollars per year.
Which is why they charge so much: they _can_.
Seth
Jonathan Kamens
>In article <hil3ph$lfi$3...@jik3.kamens.brookline.ma.us>,
>Jonathan Kamens <j...@kamens.brookline.ma.us> wrote:
>>It doesn't work to offer this service to families who are just
>>hiring a part-time babysitter for two reasons:
>>
>>1) The cost of providing the service is too high for them to
>>be willing to pay it.
>
>All we've seen is that the charge for providing it is high, not that
>the cost is.
Capitalism abhors a market vacuum. If this service could be
provided inexpensively at a profit, and there were people
willing to pay for the service if it were inexpensive, then
there would be someone offering the service inexpensively.
>>2) Most of them are paying their babysitters under the table
>>and not bothering to do it legally in the first place. I.e.,
>>the market segment is too small.
>
>Maybe if there were an inexpensive way to do it legally, more people
>would.
There is, admittedly, a potential chicken-and-egg problem:
would the market develop if someone offered to service it
inexpensively?
The reason why I do not think this is the case is because the
numerous companies who are offering this service for a lot of
money are all in a position to offer an inexpensive service at
little incremental cost to them. I.e., they've already got
the infrastructure, the staff, and the tools in place to offer
this service; they wouldn't have to spend money to make it
possible to offer it to families with part-time babysitters
for less money.
It's implausible to imagine that none of these companies, who
obviously are in the business of finding markets for their
services, have thought of this.
It is far more plausible to conclude that there is no tenable
price-point, i.e., no price customers are willing to pay at
which the vendor can make a profit, or that there simply
aren't enough potential customers for the inexpensive service
to make it viable.
In short, my explanation for why no one is offering this
service inexpensively fits better with the available evidence
than yours.
Stuart A. Bronstein
>>All we've seen is that the charge for providing it is high, not
>>that the cost is.
>
> Capitalism abhors a market vacuum. If this service could be
> provided inexpensively at a profit, and there were people
> willing to pay for the service if it were inexpensive, then
> there would be someone offering the service inexpensively.
I got the impression that the services you talked to were
specifically for nannies. There are similar services that deal with
small business of all types. I don't know but I'd guess that a place
like that might give you a better deal.
--
Stu
http://downtoearthlawyer.com
rick++
> In article <2401f778-067f-4645-92f1-e7e74e06a...@o28g2000yqh.googlegroups.com>,
>
> rick++ <rick...@hotmail.com> wrote:
> >Following the law does benefit the nanny too.
> >For every $1090 of income s/he'll get a social security
> >retirement and disability credit, up to four a year.
> Really? What good are those credits to someone who actually works for
> a living as an adult?
(1) Disability is wonderful benefit should you need it.
But after you mid-20s you cant get it unless have some
credited work history. Its an age-graded scale.
(2) Retirement is also useful. Many women take years off to raise
their own families. Scraping together the 10-year minimum
work history may require every credit counts.
Seth
Jonathan Kamens <j...@kamens.brookline.ma.us> wrote:
>se...@panix.com (Seth) writes:
>>In article <hil3ph$lfi$3...@jik3.kamens.brookline.ma.us>,
>>Jonathan Kamens <j...@kamens.brookline.ma.us> wrote:
>>>It doesn't work to offer this service to families who are just
>>>hiring a part-time babysitter for two reasons:
>>>
>>>1) The cost of providing the service is too high for them to
>>>be willing to pay it.
>>
>>All we've seen is that the charge for providing it is high, not that
>>the cost is.
>
>Capitalism abhors a market vacuum. If this service could be
>provided inexpensively at a profit, and there were people
>willing to pay for the service if it were inexpensive, then
>there would be someone offering the service inexpensively.
That would explain why the $20 bill I saw on the sidewalk must have
been an optical illusion: if it were really there, someone would
already have picked it up. Fortunately, the shopkeeper shared the
illusion so it spent just like real money.
>>Maybe if there were an inexpensive way to do it legally, more people
>>would.
>
>There is, admittedly, a potential chicken-and-egg problem:
>would the market develop if someone offered to service it
>inexpensively?
Who knows? On the back of news reports about people getting in
trouble for failing to do so properly, it might. (Or there might
develop a "market" in trading babysitters so that nobody pays any
particular one over the limit in a given year.)
>The reason why I do not think this is the case is because the
>numerous companies who are offering this service for a lot of
>money are all in a position to offer an inexpensive service at
>little incremental cost to them.
But would they see that as cannibalizing their existing expensive
services?
Seth