5 Things You Need to Know: How to Choose a Good Nanny

So let's say you've decided that you'd prefer to hire a nanny over other types of child supervision. The first step - before the vetting and hiring - is to consider all your family needs and dynamics.

After all, the nanny will be your employee and you want to be sure you hire for your specific requirements.

Questions you may ask yourself: Is a live-in or live-out nanny best for you and your children? Upon what type of schedule would you like your new household to run? Do your children have any special needs? What duties do you expect a nanny to perform in addition to child care, if any? Are there pets in the home? Is the nanny expected to run errands or transport your children in a car - if so, have you factored that into the budget? And don't forget to look long and hard at what you can afford.

Got it? Now write it up in a job description.

Once you've decided a nanny would be the best child care option for your family, it's time to search for the right person. An easy place to begin is to put out the word with other families -- nannies talk to nannies and through word of mouth you may get a few good leads.

It's also smart to concentrate your search with professional nanny placement agencies and training programs -- they exist to make matches between nannies and families easier. Working with a placement agency makes the search process easier: They locate, screen and manage the hiring process for a fee.

Once you've found a prospective nanny, you'll want to cross your Ts and dot your Is.

The International Nanny Association has put together basic nanny standards: must be at least 18 years old, must have a high school diploma or equivalent and must be in good health (with proof of immunizations).

While those are a good place to start, you'll also want to conduct a thorough background check. Request and verify references from previous employers. Check work history, education records, driving record, criminal history (which will require fingerprints), credit report and Social Security number. Screening should also verify that your prospective nanny is eligible to work in the U.S.

This isn't a secret process -- keep in mind that your applicants can ask to see any screening you do.

While a prospective nanny may have excellent credentials and references, it's incredibly important that she or he "clicks" with you and your family.

Although you'll have uncovered a lot of specific information about your nanny candidates during the screening process, interviews give you and the nanny the chance to talk face-to-face. During the interview, introduce the candidate to your children and observe how they interact. Describe your expectations and be clear about duties, hours, wages, vacation time and listen to how the candidate responds.

Also keep in mind that nannies aren't required to have any specialized training, licensing or degrees, but if it's important to you and your family, add it to your criteria. Highly qualified nannies will not only be certified in first aid and CPR training (a must) but will also have taken courses in child development. The International Nanny Association offers a nanny credential exam. Ask about the candidate's education and training.

And in the end, don't forget to trust your instincts.

Hiring a nanny is more than just the search for the right person, it also involves all the work of being an employer. In addition to paying a salary (or hourly wage), as your nanny's employer you're responsible for paying payroll taxes, which include at least federal and state unemployment insurance tax and FICA.

Nanny tax compliance makes the news most often during election seasons, when a politician or two may admit to nanny tax evasion. Politicians aren't the only casualty, they just happen to be in the public eye. In 2006, the IRS reported that about 225,000 people paid taxes on household help, which includes nannies and estimates that the number is probably much higher -- up to 770,000 child care workers are allegedly employed by private families.

The bottom line is if you pay your nanny more than $1,500 a year, you're going to get hit with nanny tax.