Many families want or need to have help while on vacation. Our nanny tax partner Breedlove and Associates offers the following advice: When travelling with an employee, federal law requires the employer to compensate the employee for all hours worked during the trip, including time spent travelling. The employee’s travel expenses, such as airfare, lodging and meals, are not taxable income to the employee; they are expenses the family incurs to have their employee on-the-job when they travel.
Hours worked when traveling are treated no differently than when working in the family’s home. The employee must be compensated for all hours she is on-the-job, and if the working time exceeds 40 hours in a 7-day period the family is required to pay overtime at a rate of 1.5 times the regular wage. While the family must pay their employee for working time, they are not required to compensate her for her non-working time (i.e. free time completely on her own, sleeping time, etc.). Because it’s vacation, there is often a question about what should be considered “working time.” The rule of thumb is fairly simple: if the employee is performing duties, it’s considered “working time” – even if the work is being performed in a beautiful beach, mountain or resort setting.