Monday, March 19, 2012

Should Au Pairs Working in America Pay FICA Taxes?

Would Taxing Au Pairs Help Unemployed American Nannies Find Jobs?

This year it was rumored that Congress was considering legislation that would require au pairs and host families pay a 7.65% FICA tax. I have been unable to track down that bill so if you can find that legislation please share that link in comment section below this article.

But, it's an interesting concept. If in fact au pairs and their host families were taxed approximately $1,500 per year would that be enough financial burden to convince the parents to hire an American citizen to work as a nanny in their home rather than an au pair in the cultural exchange program?

In the Be the Best Nanny Newsletter monthly poll, the majority of nannies that have already taken the survey have answered that au pairs are indeed filling much needed nanny jobs.

For those who feel au pairs are taking away jobs that could be filled by unemployed American citizens this legislation might help unemployed nannies looking for jobs. But, those who oppose such legislation make the point that the au pairs won't be here to benefit from the taxes they will be required to pay.

In Favor of Taxing Au Pairs:  In a difficult economy when unemployed nannies are struggling to find great nanny jobs, au pairs are working in positions that otherwise might be filled by American citizens.

Those Who Oppose Taxing of Au Pairs:  If the au pair is only working and visiting America for one or two years they will not have the opportunity to take advantage of the Social Security and Medicare benefits they would be required to fund.

Do you think au pairs working in America should pay FICA taxes?

6 comments:

jobs in my area said...

I didn't know that. But I don't think au pairs working in America should pay FICA taxes.

polly psi said...

Nannies and au pairs should compete on a level field. Au pairs are absolutely taking jobs from nannies. The au pair program is an outdated government-sponsored attempt to provide cheap help to well-to-do families.
Beware nannies: any group defending au pairs are fronts for agencies, not friends of nannies. This absolutely includes the frauds at INA.

Tobago Nanny said...

I don't think au pairs are nannies biggest competition. I feel nannies being paid off the books hurts our nation more than au pairs do.

Anonymous said...

When I was in the au Pair program over 20 years ago. The money we got paid (100) was called a stipend and not a salary our salary they said was a roof over our heads and food.

Anonymous said...

Au pairs are here for a cultural exchange program and are paid a stipend based on the federal minimum wage less costs associated with room and board since they live with the family and are considered a part of their life. They also have paid health insurance. Many however have English skills not up to par and parents need to provide an extra vehicle if part of her job is to drive the kids around. They are required to pay income taxes of 10%, less their personal exemption (though admittedly, not all of them do). I don't feel families should pay FICA taxes on a benefit they personally will never be entitled to receive.

American nannies, on the other hand, often charge 50-100% more than the cost of au pairs, don't live with the family and share in their life, and often have time commitments outside of the family's needs (such as before 7 am, after 6pm, or on weekends). [And that is the #1 reason a family chooses au pairs over nannies.] Nannies are also required to pay income taxes, and families are required to pay FICA taxes, but admittedly, this happens in few circumstances. At the very least, the nanny would earn less money due to the withholding and the family would pay out more money for the same service. This practice hurts our economy and doesn't alow the nanny to receive full benefits upon retirement.

Comparing the two on an equal playing ground isn't fair to either side for both the convenience factor and the monetary factor. If nannies would change comparably to au pairs (or vice versa), then we could compare the two and certainly the argument would lean towards giving our residents a job over importing help from overseas.

(By the way, I am a parent who adheres to hiring legally.)

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