When we were growing up, we and most of our friends had grandparents caring for us as their sole caregiver during the weekdays or workdays. Grandparents made it possible for parents to work, for single and divorced parents to raise families, for kids to make it home safely from school, for kids to make it safely to medical appointments or after-school activities, for kids to have a safe environment to come home to after school and for kids to have good parental role models to learn from.
As of 2009, it was reported that only 8% of grandparents helping with childcare received pay, according to the Wall Street Journal article, “When Granny is Your Nanny.” For some working grandparents the decision to quit paid employment to help out their own family, may not be easy. Financial issues for working grandparents to consider include: “income tax status, health insurance, … benefits associated with employment,” according to About.com’s article on Grandparents as Child Care Providers by Susan Adcox. Additional issues raised in the same article are, missing the social aspects and challenges of the workplace and whether a job will still exist if the grandparent-retiree wishes to return to the workplace.
Accepting payment from children for the care of grandchildren poses additional concerns for grandparent caregivers. According to Ms. Adcox, grandparents must consider their children’s financial habits, consider if accepting payment will make them feel guilty, whether extra expenses would be covered, and whether or not overtime would be paid. Ms. Adcox even recommends putting together a written agreement or contract “before embarking upon this commitment.” On the legal/accounting side, a financial forum discussing payment to grandparents, on FatWallet.com, recommends paying a salary that grandparents can report on a schedule C to pay self employment (FICA) taxes on. This allows the parent to claim a “child care deduction on your tax return for the amount” paid to the grandparent.
About.com did a survey of grandparents to see who would accept payment for caring for their grandchildren. Although only 113 people responded, the results were interesting. A total of 46% were willing to accept payment, while 51% were not. Here’s how the numbers broke down:
· 16% “Yes, I would expect to be paid like any other provider.”
· 30% “Yes, but I would charge a reduced amount.”
· 14% “No, I would feel guilty taking money from my children.
· 20% “No, I feel the privilege of being with my grandchildren would make it worthwhile.
· 17% “No, but I would accept gifts, outing or vacations as signs of appreciation.
From our personal experience, our grandparents never accepted payment for our care. Most of our friend’s grandparents did not get paid either. Most grandparents lived in the same household, and thus rent and utilities were often included for them by the parents. For other friends we knew who had grandparents that lived nearby, they often prepared and shared meals with the family, which helped to reduce their grocery needs.
In March of 2013, the website Grandparents.com asked its members: “Should grandparents be paid for babysitting?” They summed up many of the comments, saying, “There's a huge difference, many of you pointed out, between doing occasional date-night sitting and providing what amounts to no-cost daily daycare. And while many of you agreed that caring for a child on a regular basis warranted a paycheck, others said that they could never accept money from their kids.”
Some of the most interesting responses of the Grandparents.com survey were:
· “They [the parents] show their thanks in many ways.”
· “The pleasure I get out of watching them is worth more than the money."
· "It seems strange to be paid for a normal family responsibility. It's a privilege.”
· “I told them I would get paid, but half of my check would go into savings for the baby.”
· "Our son and his wife wanted me to quit my job and care for their son and insisted on paying my husband and me. As retired people, we needed the income.”
While many grandparents seem to feel it’s their duty to help out their children by being part of raising their grandchildren, the financial constraints of retirees cannot be disregarded. It seems that most families are able to work out childcare financial arrangements, whether actual money is exchanged or gifts and favors are exchanged instead. As children raised primarily by our grandparents, we believe in grandparents being closely involved in their grandchildren’s lives. The time we spent together with our own grandparents created a special bond that will continue to live on in our hearts.