Many families opt to hire an au pair instead of a nanny.  Hiring an au pair requires sharing space, at least initially, with a total stranger.  There are many families who have had two or more au pairs placed in their home in less than a year due to personality conflicts.  Some au pairs have been required to stay with employees of the placing agency while new families were being located. For other au pairs who stay and finish their assignment, they may never be able to quite integrate into the family.

Despite these challenges, for a family who needs more flexibility than a daycare or nursery school can offer, an au pair may be a viable option.  An au pair is able to work up to 10 hours a day and up to 45 hours per week. Those au pairs in the EduCare program can only work 30 hours per week.  For a family who does not need to use all of these hours during the week, an au pair can provide weekend childcare that would otherwise need to be provided by a baby sitter.  But, the rules require that au pairs are off one complete weekend per month and at least one and one-half day each week.

Based on the rules, au pairs are compensated weekly. In addition to the weekly compensation, the agencies charge a placement fee.  These fees can range between $7,000 to $10,000. The host family also must pay between $500 – $1,000 toward the au pair’s education.  Even so, when compared with the fee charged by many nannies for the same number of hours, hiring an au pair is much more financially viable.  A family would need to find a nanny who would charge just $10 per hour in order to pay an amount comparable to what is paid for an au pair.  In addition, Social Security and Medicare taxes (FICA taxes) need to be paid when employing a nanny.  These taxes do not apply to the employment of an au pair.

Employment Taxes

Employment taxes include FICA taxes, federal unemployment tax, and personal Income tax. For those families who would rather avoid paying employment taxes, an au pair may be the best option.  Generally, au pairs are considered non-residents of the U.S. and are not subject to FICA and other employment taxes.  But in order to be certain, the au pair should be interviewed to determine if he or she has been to the U.S. previously and under what circumstances.  If the au pair has been to the U.S. previously, it is possible that he or she would be considered a resident and would be subject to all employment taxes.

Because the au pair’s work is considered household employment, the host family is not required to withhold personal income tax on behalf of the au pair, but may if both the family and au pair agree.  If the family does withhold personal income tax, the au pair should provide the family with IRS Form W-4.  The family will report withheld income tax on Schedule H at the end of the year and will also need to file Form W-2 with the Social Security Administration.  Contact Nanny Tax Solutions to set up your account if you have an au pair for whom you will be withholding personal income taxes.