IT’S HOLIDAY BONUS TIME

‘Tis the season! As we wrap up the year, many families are planning ahead for the holiday season. For household employers, this is an ideal time to recognize the important role your nanny plays in your daily life. One of the most meaningful ways to show appreciation is with a holiday or year-end bonus. In this blog, we’ll address your frequently asked questions about providing a holiday bonus for your nanny.

WHAT IS A HOLIDAY BONUS?

A holiday bonus is additional compensation that employers may offer as an acknowledgment of a job well done. Many employers find that providing a holiday bonus boosts morale and enhances employee retention. Read on for more reasons employers choose to offer a holiday bonus.

A Way to Say Thank You: Caring for children is no small task. Your household employee likely provides emotional support in addition to their daily responsibilities. A monetary bonus is a direct and thoughtful way to recognize their efforts and dedication.

Bonuses are Common Industry Practice: While not required, it’s very common for household employees to receive an end-of-year bonus. If your employee has worked for other families before, chances are they’ve become accustomed to them.

Bonuses Help Foster Loyalty: Feeling appreciated encourages employees to stay. A year-end bonus along with a kind message can reinforce the mutual trust and respect that helps build long-term working relationships.

HOW MUCH IS A TYPICAL BONUS?

The appropriateness of a holiday bonus depends on the household budget. It can be a fixed sum, a percentage, or determined by other factors set by the employer. See below for key factors to consider.

Location: In high cost-of-living regions, bonuses tend to be on the higher side. The average bonus in the Seattle area is one week of pay.

Tenure: Employees who have been with your family longer often receive larger bonuses. You may consider offering up to 2 weeks’ worth of pay for an established and high-performing nanny.

Employee’s Perspective: Bonuses can feel personal. Communicate openly if you are having budget constraints. Afterall, a big change from previous years could lead to a misunderstanding. Simply share your position so your nanny is informed.

Plan Ahead: When possible, try to plan ahead and build the bonus into your annual household employment budget. It makes things easier for you and keeps expectations clear for your employee.

WHAT IF WE JUST HIRED OUR NANNY?

For a newly hired nanny, offering one day of pay for each month of employment is a thoughtful gesture, considering bonuses are typically based on performance.

ARE HOLIDAY BONUSES TAXED?

Holiday bonuses are considered taxable income. While it may feel like a gift, any year-end bonus (including gift cards) is considered taxable income by the IRS. As a household employer, that means it needs to be reported and taxed just like regular wages. If this is news to you, you’re not alone! Many families are surprised to learn that holiday bonuses come with tax responsibilities. Ensure compliance with household employment requirements by processing the bonus through payroll. If possible, consider adding a little extra to help offset taxes.

CONCLUSION

A holiday bonus or a heartfelt gift is a wonderful way to express appreciation for your nanny’s contribution to your family! If you have any questions, feel free to contact Starling Agency.

Starling is a stellar nanny placement agency proudly serving Greater Seattle and the Eastside. Starling nannies are passionate about education and child development! We represent professional nannies, private teachers, newborn care specialists, household managers, family assistants, personal assistants, and more. Learn more about Starling’s core values.