Global Courant
You are now proud parents. As soon as you found out you were pregnant, you probably started thinking about your childcare options. Will you take the baby to daycare or hire a babysitter to take care of your child at home?
If you go the babysitting route, you have a few options: You can hire a babysitter through a professional babysitting service, which is a lot more expensive, but has a number of benefits:
- The agency screens candidates and checks references for you.
- The agency provides temporary nannies to fill in if your nanny is sick, goes on vacation, or just doesn’t show up.
- The agency has liability insurance in case one of your children is injured during the sitter’s care. (Most self-employed nannies don’t have liability insurance.)
- The agency has workers’ compensation insurance that covers the sitter if she is injured on the job, regardless of fault. This greatly reduces the chances of the sitter suing you for work-related injuries.
- The agency does all the withholding, pays all payroll taxes, and issues the paychecks to the sitter so you don’t have to.
Not all babysitting services offer all of these benefits, so make sure you understand what you’re getting into before you sign up on the dotted line.
A second option is to hire your own babysitter. You can hire her as an independent contractor, a common approach but one that has liability and potential tax consequences that I don’t think are worth it. A better and safer choice is to employ your nanny. Yes, you have to hand her a paycheck and withhold some. And, depending on what state you’re in, you may need to get an employee insurance policy for her. (Contact your state’s employment office for information on domestic workers’ compensation requirements. Many states exempt you from the requirement to provide coverage for a single worker.)
If you are required to take out employee insurance, you will benefit in two ways:
- The sitter is prohibited by law from suing you if she is injured on the job.
- The nanny can collect her medical bills and lost wages through your employees’ compensation policy, regardless of how it happened.
For more information on domestic workers and the IRS rules, visit or call 800-829-3676 and request publication 926: Household Employer’s Tax Guide.
If your sitter will drive or pick up your child as part of her duties, your child could be injured in a car accident caused by the sitter’s negligence. Here are some steps you can take to protect yourself and your child before hiring the sitter:
- Get her permission to check her driving. Request her driver’s license number and vehicle registration number. Then give both numbers and her signed authorization to your auto insurance agent and get her driving and accident records. If her file hasn’t been clear for at least three years, look at other candidates.
- Have proof of her auto insurance liability coverage if she uses her own car. Make sure both her liability and uninsured/underinsured motorist coverage is at least $300,000. If not, ask her to raise them to at least that level. Offer to pay the extra charges if needed. The cost for additional liability coverage is very small — $50 to $100 per year.
- Add her to your auto insurance policy as an occasional operator if she will be using your car regularly.
Insurance for hiring a babysitter
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