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What You Need To Know About Year-End Bonuses

The end of 2022 is right around the corner. This is a popular time for household employers to recognize their employees with a holiday bonus. A bonus is a great way to show your appreciation for a job well done and shows your employees that you are grateful for their dedication.

Whether it’s a senior caregiver, a nanny, or another employee that works hard in your home each day, a great household employee helps simplify your life. Here are the top reasons household employers tell us they choose to give annual bonuses, along with tips to keep in mind if you do.

It gives you a tangible way to say thank you

Nannies and caregivers provide attentive care for your children or loved one daily. This can be an exhausting and difficult job at times. A monetary bonus at the end of the year is a great way to tell your employees that you’re grateful for their compassion and loving care.

Bonuses are customary

It is very common for household employers to recognize their employees with a bonus. While your employee may not expect a bonus, they may have received one in the past, and hope you will follow suit.

It helps build loyalty

Employees who feel unacknowledged often become discouraged and they may even start looking for new employment. If you are happy with your household employees’ work, let them know. Providing a year-end bonus is a great way to foster a stronger working relationship and ultimately, establish long-lasting loyalty.

There are some variables to consider in determining the appropriate amount for your bonus, such as:

  • Geography: Annual bonus amounts can vary depending on where you live: more in large cities and less in rural areas. While the standard range is one to two week's pay, feel free to colleagues or friends what they provide their household employees, or call the nanny agency that helped you hire your caregiver.

  • Number of Years on the Job: Employees who have been with a family for many years typically receive a larger annual bonus than those who have not.

  • Employee perception: If you're watching your budget to make sure you can afford to pay your employees a decent wage, they may be understanding if you can't give a large sum as a bonus. On the other hand, if you’re planning that weeklong tropical vacation, your employee will notice, and they’ll wonder why you weren’t more generous. Be consistent. A sudden drop in the end-of-year bonus may send a signal that you're unhappy with your employee’s work, which could damage your relationship. Try to factor the bonus into your annual budget to avoid being caught short at the end of the year.

Remember that your employee’s holiday bonus is considered to be taxable incime. and you must report and pay taxes on it. Many families don't realize that even the dollar value of a gift card must be reported as income. Since you are an employer, your bonus doesn't qualify as a gift.

Reposted with a permission from Home Work Solutions (

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