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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 0 and 0 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.The dollar amount of these background checks, physical exams, and drug testing is typically hundreds of dollars, but can get higher as depending on how extensive you want to get.   Once the family hires the nanny, her compensation (including but not limited to wages, meals, insurance, or other benefits and amenities provided to the nanny) is the largest component of the cost of childcare.Keep in mind that nannies will often recieve bonuses, so this compensaiton chould be included in total childcare cost.

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.  In total, these taxes can amount to approximately an additional 9% of the nanny’s compensation.

Due to the complexity and effort required to report and pay these payroll taxes, many families hire lawyers, accountants or payroll services to handle these tasks for them.  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 is going to be driving the family or even her own car in the course of her employment, the family also should obtain appropriate auto insurance as well.Again, worker’s compensation and automobile insurance costs should be included in the analysis of childcare cost.

An experienced expert witness can aid family law professionals in adding up 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 experts featured by Consolidated Consultants: The Expert Witness Referral Company.He has served as an expert witness in divorce proceedings over the cost of childcare, as well as general household employment.He is also a member of the Board of Directors for the International Nanny Association.

Tags: child support, childcare expert witness, divorce, nannies, nanny, nanny expert, who gets the kids