I am employing a caregiver to give 24/7 care for my sister. Is a 1099 the only tax form I will need?

I was told that I a an employer must pay all taxes is this true

Answers 1 to 10 of 49
It depends on the employment situation. If the caregiver is self-employed or paid through a service, then they are responsible for the taxes and SS. If you are employing, then you are.
Top Answer
If the caregiver works for an agency, then the agency submits the 1099 to their contract labor or a W-2 for employees.

If you or your parent pay for a caregiver directly, then they should be considered contract labor & any money paid over $600 per year should have a 1099 issued by January 31 of the following year.$600 is the threshold for 1099's, under $600, no 1099. Just in case, you should look at the IRS guidelines for contract labor vs. employee. Contract labor is kinda easier to deal with.

So if in 2012 you paid Sally, the retired nurse neighbor, $8,000 for caregiving for your mom, then Sally should get a 1099 for 8K from you and it should have been mailed to Sally by 1/31/13. Sally is responsible for reporting this as income on her taxes and paying whatever tax liability she has because of it.

What you need to provide to Sally is a W-9 - Request for Taxpayer ID #. There is also another form, the I-9, that gets used to vett citizenship for Homeland Security
for any contact labor or employees hired in the US. You can go on-line to download & print these. You give them to Sally, she fills them out and you keep both in your tax file somewhere.

For my mom, when she was still living @ home, the caregivers were with an agency so nothing had to be done by myself or my mom. I have a business and use contract labor on projects, they have to do the W-9 and I-9 and submit it to me before they will get paid. No excuses either. Then they get a 1099 in January for all money paid to them, fees, expenses, whatever as 1 sum. It's up to them to report it as income and figure out their expenses or deductions to do their taxes and pay the tax liability on that income. I've done my part required by the feds and the contract labor is a business expense deduction. I am not responsible for paying any of their tax liability.

One problem is those folks who want to be paid under-the-table for whatever reason. that's a decision only you can make as to whether to do it or not. But keep in mind, that if mom does this for years and years and the amounts add up, IF she applies for Medicaid, you may have to provide documentation that the amounts paid to Sally were for caregiving so that it isn't viewed as gifting. So you need to keep records. Good luck.
Barb - really look at the IRS site for employee vs. contract labor. If they meet the criteria for contact labor, that is much easier route to go. If they are really truly employees, then you have to deal with withholding and a host of other employer issues which could be alot to deal with.
Here's the IRS form that helps you determine whether not the worker is a household employee and what you need to if they are. Because you control the schedule, set the duties, and provide any supplies your homecare worker needs, they are considered a household employee rather than an independent contractor. If anything in this publication doesn't make sense, you should talk with a tax expert. Sometimes senior centers have tax preparers who come in during tax season to help seniors file their taxes, so you may want to contact your local senior center. Good luck!

IRS Form 926, Household Employer's Tax Guide: http://www.irs.gov/pub/irs-pdf/p926.pdf

Thanks, Igloo...I was following this thread to see if anyone would answer. I needed to figure this out with sis who just moved in recently. She will be "babysitting" the parents while I work Mon-Friday. Thanks....
Oooops Igloo! You are soooo NOT correct, sorry. I know a 1099 is simpler, but it ain't legal unless the person properly falls in the category of a business. 1099's are misused by many and could prove a VERY costly mistake.

Caregiver payments fall under the category of Household and are considered wages subjet to social security & medicare withholding (Form W-2). Schedule H can be used to report the wages (by itself or attached with your Form 1040 tax return). Publication 926 can provide useful information about reporting and withholding requirements. Form SS-4 is an application for a federal EIN (employee identification number) which will be needed to file Schedule H; Form W-4 is completed by the employee to provide you with their SS# and address information; Form I-9 is a verification form that may be needed to determine if the employee is a US citizen or eligible to legally work in the United States. Check with your State to determine their filing requirements for State taxes and unemployment (SUTA).

If you have contracted with an agency or other 3rd party agent for a caregiver, they are generally responsible for the withholding on the individual(s) they provided for you and you can issue the agency a 1099 for the payments you made directly to them.

Additionally, there could be other tax considerations, particularly involving deductibility of these types of expenses, and it would be advisable to discuss them with a tax professional.

f-y-i, I am a CPA.
Claire - have inc & llc & am the K-1 100%, as such can determine & set up a vehicle to pay a worker as contract labor as they are paid via either the inc or llc. I did it this way for caregivers for my mom with no IRS issues. Another way is to do this via a trust to pay the caregivers with the trust doing a 1099 - as the trust cannot be a household and therefore cannot do a w-2. I have a cousin who has a special needs trust and his help is paid via 1099 (I am one of the directors on the trust). All require legal to do and maintain but well worth it, imho.
Sorry, busy with tax season and didn't get back here earlier.

Igloo, again, sorry, but I believe you really need further advice. I'm concerned because others may rely on what you have written. The substance of an issue cannot be ignored -i.e. employee or non-employee. If you previously issued 1099's with no problems, well, maybe it was correct for your situation or then again, Not Every One Gets Caught. If an issue should come up due to a mistake, it can be quite expensive. Ignorance of the law is not a defense.

I'm not sure what you believe the inc (corporation) and LLC (a State function, not a federal entity) have to do with contract labor vs employee because I can assure you the entity type (vehicle) does not make a difference. As for a Trust, Schedule H (Form 1040) is also used to report household wages with Form 1041 (Trust). See the Schedule G part of your trust tax return Form 1041.

All I'm saying is that people should discuss their individual situation with someone who has adequate information to properly advise them whether payments should be considered W-2 wages or if a 1099 is appropriate. After many years of accounting practice I can safely advise that it is easier and cheaper to report payments to individuals according to the regs -this is not a gray area. It's also not that difficult or expensive to report wages correctly.
This seems like such a complicated issue. We paid my brother $650/month to care for my mom for six months this past year. I'm guessing it will be easier for me to consult with a tax accountant.
All of 2012 and part of 2011 we privately paid a woman to go in and help my mom with taking care of my father. We paid her $250/week for four hours daily, seven days a week. I definitely need to seek the advise of an accountant. Things are getting too complicated for me.

Good choice PinkLA. It's really not too complicated, but it does take some extra time. And it's safer to follow the legal requirements. I am concerned some people might try to rely on some very misguided advice that was posted earlier. As I said in a previous post, I am a Certified Public Accountant -I am not guessing about what I posted. There have been other posts on this site regarding caregiver payments by several other posters who are doing it correctly and they have provided accurate information about the subject.

Information about caregiver wages is provided in IRS Publication 926 which is very easy to find on the internet or at the IRS website. Good luck to you and don't forget to check on the deductions for caregiver wages & payroll tax expenses and also to look at the dependency rules -one of you may be able to claim your mother as a dependent (or possibly take turns). A little professional advice can be very helpful.

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