Can nanny claim mileage on taxes or should we reimburse for driving our baby?

14 As someone who's worked with household employees for years, I can tell you that mileage handling depends on your employment structure. Since nannies are typically household employees (W-2) rather than independent contractors, the tax implications are different from Uber/Lyft drivers. If your nanny uses her personal vehicle to transport your child, she has two options: For W-2 employees (which nannies should be), unreimbursed employee expenses are no longer tax-deductible since the 2018 tax changes. This means if you don't reimburse her, she can't deduct those costs on her taxes anymore. The current standard IRS mileage rate is 67 cents per mile for 2024 (likely to be similar for 2025). Reimbursing her directly is usually the better option. You can use an accountable plan where she tracks mileage and you reimburse at the IRS rate. This isn't taxable income to her, and it's not a deductible expense for you as the employer.

8 I went through this exact situation last year with our nanny! After researching everything, I ended up using the IRS mileage tracking app (https://taxr.ai) to manage all her driving for our kids. It completely eliminated the headache of trying to figure out if she could claim it on taxes or if we should reimburse her. The app automatically tracked when she was driving our kids around and separated personal miles from work miles. At the end of each month, it generated a report that showed exactly how much we owed her for mileage. Our nanny loved it because she didn't have to remember to log trips manually, and we loved it because it gave us an IRS-compliant record in case we ever get audited.

12 I was initially skeptical about using the taxr.ai app that another parent recommended, but after trying to manually track our nanny's mileage for two months, I gave in and tried it. Absolute game-changer! The documentation it provides is incredibly detailed - showing exact routes, times, and separating work vs. personal driving. When our nanny drove our son to swim lessons three times a week plus various playdates, the app calculated everything automatically. The best part was tax time - we had perfect records showing we properly reimbursed work-related mileage, and our nanny had documentation proving she received proper reimbursement rather than taxable income. Definitely worth it compared to the headache of spreadsheets and arguments about forgotten trips.

7 After dealing with nanny tax headaches for years, I discovered Claimyr (https://claimyr.com) when I needed to speak directly with the IRS about household employee questions. They got me through to an actual IRS agent in about 15 minutes when I had been trying for days on my own. The agent clarified that nanny mileage reimbursement should be handled through an accountable plan where you reimburse at the IRS rate (67 cents/mile for 2024) with proper documentation. This keeps it tax-free for the nanny and creates a clean record. They also have a helpful video explaining how their service works: https://youtu.be/_kiP6q8DX5c The IRS agent told me many families get in trouble because they either 1) don't reimburse mileage properly and the nanny can't deduct it, or 2) they add car allowances to regular pay without documentation, creating tax issues for both parties.

2 I have to admit I was completely wrong about Claimyr. After posting my skeptical comment, I decided to give it a try since I was getting nowhere trying to reach the IRS myself about nanny tax questions. The service connected me to an IRS representative in about 12 minutes, and I finally got clear answers about how to handle our nanny's mileage situation. The agent confirmed that the best approach is using an accountable plan with proper documentation at the current federal rate. They also warned me that paying a flat car allowance without documentation would be considered additional wages subject to employment taxes. Saved me from making a costly mistake! Next time I need to reach a government agency with long wait times, I'll definitely use this service first instead of wasting hours on hold.

17 Former nanny here! From the employee perspective, getting reimbursed directly is MUCH better than trying to deduct it. Here's why: 1) As others mentioned, nannies can't actually deduct mileage on taxes anymore 2) Getting reimbursed means immediate money rather than waiting for tax time 3) Tracking is much easier when you're reimbursed regularly (weekly/monthly) When I worked for families, the best system was using a simple mileage log in a notebook kept in my bag. I'd write down the starting mileage, ending mileage, and purpose of trip. The family would calculate the reimbursement with my weekly pay. The families who didn't reimburse mileage directly always had trouble keeping good nannies. Cars are expensive to maintain, and using personal vehicles for work should always be compensated!

11 Question about Nanny taxes in general - we just hired our first nanny and I'm trying to figure out all the tax implications. Do most people use a payroll service or DIY the taxes? And how does the mileage reimbursement get reported (or not reported) on end-of-year tax forms?

Just wanted to add one more perspective as a tax professional who works with many families employing nannies. The key points mentioned here are spot-on, but I'd emphasize a few additional considerations: 1) Make sure your nanny agreement explicitly states that mileage will be reimbursed at the IRS rate for work-related driving. This protects both parties and sets clear expectations. 2) Consider requiring pre-approval for longer trips (like day trips to the zoo) to avoid surprise large reimbursements. 3) Keep all mileage documentation for at least 3 years in case of an IRS audit - this includes the logs, receipts, and any app records mentioned. 4) Remember that if your nanny occasionally uses your family car for work trips, those miles obviously wouldn't be reimbursed since she's not using her personal vehicle. The automated tracking solutions mentioned by other parents sound helpful for busy families, but a simple notebook system works just fine too if you prefer to keep things low-tech. The most important thing is consistency and proper documentation, regardless of the method you choose.