Calculating The Cost Of Childcare For Divorced Parents
Posted by admin on July 31st, 2010
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Calculating the cost of childcare in divorce proceedings can be a complicated endeavor. And if all the costs are not included in the analysis, your client could lose out on a substantial amount of money.
While simply adding up the monthly costs of daycare can be relatively straightforward, the costs of hiring a nanny are numerous and by no means obvious. Indeed, if you simply penciled in the amount of the nanny’s annual compensation, you would significantly underestimate the cost of hiring and employing the nanny.
The first thing you must do is consider the expense of hiring a qualified domestic employment agency (or nanny agency) to start a search.Agencies will usually charge between $100 and $250 for registration, and then 14-18% of the nanny’s annual compensation package (including room & board) as a fee. With a nanny making approximately $35,000 per year or more, the agency’s placement fee alone likely will exceed $5,000.
Additionally, it’s common for families to run background checks on hired help, and requiring a physical or drug test is not out of the question either.These background checks, physical exams, and drug testing can cost several hundred dollars, but the total cost can be more if the testing is very extensive.Once the family hires the babysitter, her pay (including but not limited to salary, meals, insurance, or other benefits) is the largest component of the total cost of childcare.Remember to include holiday and annual bonuses in the childcare cost, as that these are very typical pieces of nanny compensation.
In addition to these compensation costs, because the family is almost always the nanny’s employer (nannies are virtually never independent contractors), the cost of childcare also should include the cost of the employer’s share of taxes on the nanny’s compensation.
These taxes include 6.2% of the nanny’s wages for Social Security (on wages up to $102,000 for 2008) and 1.45% of the nanny’s wages for Medicare (taxable on all wages), as well as a variety of smaller federal and state taxes.All together, these taxes can add up to an additional 9% of the nanny’s compensation.
Due to how difficult and complex it can be to report and pay these payroll taxes, many families hire attorneys, CPA’s, or payroll companies to take care of these tasks. The cost of these services also should be included in the overall childcare cost.
Finally, there are insurance costs that should be considered as well. Many states require household employers to provide worker’s compensation insurance for nannies and other household employees.Similarly, if the nanny will be using the family car or even her own, it makes sense for the family to have the proper auto insurance in place.Again, worker’s compensation and automobile insurance costs should be included in the analysis of childcare cost.
A qualified expert witness can assist family law attorneys in calculating these childcare costs. An appropriate expert can provide data on typical nanny compensation in a given geographic area as well as the range of nanny agency fees in the region.The expert can also validate the payroll, taxes, and insurance costs from direct experience with the nanny industry.
The best expert resource for this testimony is an individual with a thorough knowledge of entire domestic employment industry including employees, agencies, taxes, payroll and insurance. This one expert can testify to the entire range of subjects and ultimately provide the client with a comprehensive and effective childcare cost report.
Using an expert in this field can significantly increase childcare cost recovery for your client, by making sure that all childcare costs are accounted for in the analysis.
This Childcare Expert Witness is the Founder of a leading law firm representing household employers and domestic employment agencies. He is one of the many technical expert witnesses with full C.V.’s featured by Consolidated Consultants: The Expert Witness Services Company. This is a free service.He has served as an expert witness and provided expert witness testimony in divorce proceedings over the cost of childcare, as well as general household employment. He also serves on the Board of Directors for the International Nanny Association.
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