As a parent juggling work, family, and other responsibilities, finding reliable and affordable child care is essential. Fortunately, there’s a popular solution that not only fits your budget but also enriches your family’s cultural experiences – hiring an au pair. Keep reading to find valuable insights on the typical cost of au pairs vs. nanny, taxes, insurance, payment plan options, and more, so you can make an informed decision for your family’s needs.
At a glance:
What is the average cost of an au pair?
Cost of Au pair vs. nanny
Au Pair cost calculations
Do I have to pay Au Pair taxes?
Child care tax credits
Paying Au Pair insurance
Payment options
The Basics: What is an Au Pair?
An au pair is a student between the ages of 18-26 who comes to the United States as part of a cultural exchange program and agrees to provide full-time child care in exchange for housing and a weekly stipend. They can provide childcare for up to 45 hours per week, with a maximum of ten hours at a time, due to work visa protection regulations. Besides providing reliable childcare assistance, au pairs bring their unique language, traditions, and customs, making it a truly enriching cultural exchange experience.
Related: What is an au pair? Pros and cons
What is the Average Au Pair Cost?
Since au pair programs are government-sponsored, costs are regulated. According to the U.S. Internal Revenue Service, au pairs are paid a weekly stipend equivalent to the U.S. federal minimum wage. Under the Fair Labor Standards Act (FLSA), au pairs must receive a weekly stipend of no less than $195.75. Since the stipend is based per family, you do not pay more for additional kids.
Keep in mind there are some upfront costs you will incur. These costs include the au pair agency application fees and the placement fees (which cover recruiting, screening, paperwork processing, some travel expenses, visa, and training). Once they arrive, there are additional expenses outside of the weekly stipend. These include providing a private room, meals, paid vacation time, and a $500 educational stipend. Even with these additional fees, au pair care is much more affordable than live-in or live-out nannies or babysitters.
There are a lot of advantages to having an au pair and paying a higher rate over other childcare options. When comparing the cost of an au pair vs. the cost of a nanny, an au pair is often a more budget-friendly option as their compensation is generally lower due to the exchange nature of the program.
Related: UrbanSitter’s Guide to Pay Rates
Cost of Au pair vs. nanny
Au Pairs: Generally more budget-friendly, with estimated costs ranging from $8,000 to $12,000 annually. This includes room, board, stipend, and educational allowance. Au pairs may have some child care experience but not necessarily professional qualifications.
Nannies: Typically more expensive, with hourly rates ranging from $15 to $25 or more. The annual cost can vary widely based on location, experience, and additional benefits, but it’s estimated to be around $30,000 to $60,000 or higher. Nannies often come with professional childcare experience and offer flexibility in scheduling and duties.
When comparing au pair costs vs. nanny costs, it’s crucial to consider your budget, your family’s needs, and the level of expertise required for your childcare.
Related: How much does a nanny cost?
What to Include in Au Pair Cost Calculations
When considering hiring an au pair, it’s essential to have a clear picture of the associated costs. Here’s what you can expect to include in the overall expenses:
-
Stipend: Au pairs receive a weekly stipend for their child care services. The amount may vary depending on factors such as the host country’s regulations, the number of hours worked, and the au pair’s experience.
-
Room and Board: As part of the au pair program, the host family provides accommodation and meals for the au pair. Ensuring a comfortable living space and nutritious meals is an integral part of the arrangement.
-
Cultural Exchange Activities: Families often include their au pairs in cultural experiences and activities with their children. These costs might involve outings, language classes, or other enrichment opportunities.
-
Health Insurance: It is common for host families to provide health insurance for their au pairs during their stay. Ensuring the au pair’s well-being is a priority.
-
Transportation: Depending on your family’s needs and location, you might need to consider covering transportation expenses for the au pair.
-
Agency Fees: If you choose to go through an agency to find your au pair, there may be associated agency fees or program costs.
-
Visa and Immigration Fees: If your au pair is coming from a foreign country, there may be visa and immigration-related expenses to consider.
-
Miscellaneous Expenses: Additional costs can vary, such as mobile phone plans, pocket money for personal expenses, or other agreed-upon arrangements.
Taxes: Do I Have to Pay Au Pair Taxes?
Social Security and Medicare taxes:
One of the advantages of hiring an au pair is that their wages are typically not subject to social security and Medicare taxes. This exemption is due to the au pair’s status as a J-1 nonimmigrant and being classified as a nonresident alien. However, if annual au pair wages exceed the payment threshold, then the host family would need to withhold social security and Medicare taxes.
Income Tax Withholding
Au pair stipends are classified as “wages” due to the employer-employee relationship between the au pair and their host family. As per IRS guidelines, since au pair wages fall under domestic service in a private home, they are not subject to U.S. income tax withholding. However, it’s important to note that au pair wages are considered part of the recipient’s gross income, so au pairs are obligated to file U.S. individual income tax returns.
Federal Unemployment Taxes (FUTA)
Since most au pairs are nonresident aliens, their host families are typically exempt from paying federal unemployment taxes on their au pair wages. Please note: We are not licensed tax professionals. We encourage you to reach out to your tax professional for any questions or advice.
Child & Dependent Care Tax Credits: Can I get a tax credit?
To qualify for the child-care tax credit, your au pair must acquire a Social Security number or an ITIN (Individual Taxpayer Identification Number). This credit allows you to claim a percentage of the childcare expenses you’ve paid for children under 13, provided you are paying a childcare worker to look after your children while you work or search for employment.
According to the IRS, as of 2024, you can count up to $3,000 in expenses for one qualifying child or up to $6,000 in expenses for two or more qualifying dependents. The amount of the tax credit is based on your adjusted gross income and can range from 20%-35% of your expenses. You must identify the care provider on your tax return, report the wages paid to the au pair, and remit the necessary employment taxes. Please note: We are not licensed tax professionals. We encourage you to reach out to your tax professional for any questions or advice.
Insurance: Do I Need to Pay Insurance for My Au Pair?
Host families are typically not required to provide health insurance coverage for their au pairs. However, it is important to confirm the specific insurance regulations with the sponsoring organization or agency you are working with.
While health insurance is not mandated, some sponsoring organizations may offer health insurance options for au pairs as part of their program. These options can be beneficial as they ensure that your au pair has access to medical care and coverage during their stay. Besides health insurance, other forms of insurance, such as liability insurance, may want to be considered to protect both your family and your au pair in case of unexpected incidents. Please note: We are not insurance professionals. We encourage you to reach out to your insurance professional for any questions or advice.
Au Pair Payment Plans
Payment plan options for au pairs, facilitated by agencies, typically include weekly or bi-weekly payments. These agencies often provide guidance and support for host families in setting up a payment schedule that aligns with their financial preferences. Payment methods can vary, but direct bank transfers or electronic payment platforms are commonly utilized for secure and efficient transactions between host families and au pairs.
Does the cost of an Au Pair fit your budget?
If you decide an au pair is the right fit for your family and budget, to host an au pair, there are a number of agencies approved by the U.S. Department of State who can connect you. If not, a nanny or daycare option might be a better fit, here’s a quick comparison between an au pair, nanny, and daycare.
Please note that UrbanSitter is a platform for families and caregivers to connect. We are not an agency and do not employ caregivers. All members are individually responsible for any applicable tax, withholding or reporting. We are not licensed tax professionals. We encourage individuals to reach out to a local tax professional for any questions about tax preparations
