You've hired a live-in nanny. Congratulations. You've probably weathered countless interviews and checked dozens of referrals. But your work isn't over: Let the paperwork begin.
Such chores as filing monthly tax remittances on behalf of your nanny, registering her with the Workplace Safety and Insurance Board (WSIB) and keeping track of government updates to Canada's Live-In Caregiver Program are now - or should be - part of your routine.
But filing your own taxes on time can be hard enough.
So some time-starved parents are turning to niche tax professionals specializing in nanny taxes.
Toronto mother of three Bonnie O'Hagan was relieved to discover Tax4Nanny.ca, a company launched last summer by accountant Gila Ossip. "It goes beyond the usual task of paying household bills," says Ms. O'Hagan. "I found nanny taxes were above the limit of what I could do. I was always procrastinating, putting it aside to deal with later. Often I'd pay late."
Ms. Ossip, a chartered accountant and a mother of two, started her business after noticing a steady demand among her own circle of friends. "Come tax time, everyone was calling me," she says.
The details can be devilish. For instance, live-in nannies are usually paid a net salary; taxes and deductions must then be based on what the gross income would be. "Nowhere else does anyone get paid net," Ms. Ossip says.
Another tax oddity is that room and board is considered a taxable benefit, even if a family doesn't "charge" their nanny anything against her salary, says Deborah Shure, who has run nannytax.ca for about three years and serves clients across Canada.
"Even though there's no money changing hands, it is taxable," Ms. Shure says. "I've heard of people having to pay thousands of dollars at the end of the year."
Another common slip-up is failing to register a nanny with the WSIB.
"I cannot begin to tell you how many people call me for my services and I tell them they need to register with WSIB and they say they've never heard of it."
Those who run these specialized tax services say they're filling a void left by traditional accounting firms. But Cleo Hamel, a senior tax analyst with H&R Block, says nanny taxes are "nothing unusual." The key lies in realizing that you're a small business owner and that if you hire a professional to do your taxes, to make sure you find someone with payroll or corporate experience.
"Do I think you have to go to a specialist for nannies? No I don't think so," she says.
Still, many busy parents appreciate knowing that someone else is keeping track of developments in the field - and they're willing to pay them in the range of $300 to $500 to have their taxes done.
This tax season, nanny tax pros are keeping their clients updated on changes to the tax credit structure that came with the 2009 Federal Budget: Nannies will receive a new credit in 2010. They're also reminding clients that the minimum wage for Quebec live-in caregivers is going up to $9 an hour on May 1 and it changed to $10 an hour last month in Ontario.
Many parents would rather outsource the tracking of such minutiae. Toronto mother of four Linda Mantia says getting help with her nanny taxes has actually reinforced the reason she chose to hire a nanny in the first place.
"For me, it's about spending as much quality time as I can with the family," she says, acknowledging that Ms. Shure often has to hound her for signatures or paperwork. "Doing the taxes is just one more thing to worry about that you can outsource."