Salary Negotiation 101

One thing’s for sure–talking about money can be awkward. The family that wants to hire you is trying to stay on budget, but you also have to think of your living expenses. On top of that, as a full-time caregiver, the conversation only starts with your pay! Professional pay also includes factoring in extra cost to help you qualify for benefits like unemployment coverage, Social Security income, Medicare coverage and more.

If you think you're ready to talk with your employer, our sample email to families can be a good place to start. Or, just keep reading to get more information!

The Basics

Whether you’ve already found a job or you’re still looking, it’s important to know the going rate in your area—and how that compares to what you think is fair. You can use our calculator to get a better idea of what other caregivers are being paid. To get started (and to get some of the benefits we mentioned above), you should understand the difference between “gross” and “net” pay.

Professional Pay — Gross vs. Net

When discussing your pay, it’s very important to understand the difference between gross wages and net pay. Employers and employees often confuse these terms or don’t clarify whether the pay amount they’re negotiating is a gross or net number. In simple terms, gross pay is your pre-tax pay and net pay is the amount you take home. Here’s a sample scenario:

Gross Wages: $500/wk ($26,000 per year)

Tax Withholdings (Single with 2 allowances)

Social Security & Medicare: $38.25
Federal Income: $37.00
State Income: $20.48
Total Tax Withholdings: $95.73

Net Pay: $404.27/wk ($21,022 per year)

**Keep in mind that there are some additional taxes to the family. Like you, they also have to pay Social Security and Medicare taxes, and some money goes towards funding federal and state unemployment insurance pools. In the example above, the family would take on about $50 in additional taxes, which means it would really cost them about $550 each week to hire you.

Family Benefits

On top of everything, the families you work for can get some really great benefits, too. Beyond setting up automatic and hassle-free payments, they may be eligible for valuable tax breaks and reduce the risks of an IRS audit. And with a payroll service, all the paperwork and logistics are handled for them.

Ready to have a conversation with your employer? If you’re not sure where to start, you can use all or part of this Sample e-mail

Ready to have a conversation with your employer? If you’re not sure where to start, you can use all or part of this sample email to families.

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Remember, you can use our free Nanny Tax Calculator to help both of you evaluate different pay scenarios. Be clear, be up front and be honest about what you want!

* The tax information contained in this article should not be used for any actual nanny relationship without the advice and guidance of a professional tax adviser who is familiar with all the relevant facts. The information contained herein is general in nature and is not intended as legal, tax or investment advice. Furthermore, the information contained herein may not be applicable to or suitable for your specific circumstances and may require consideration of other matters.

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