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My FIL will be receiving home care from a very good caregiver that states she has her own business. What would she need to have to verify that she is legit with the IRS? We want to make sure that my FIL is hiring someone that is deemed legitimate so that the IRS doesn't come after him.

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I disagree with all the answers here. Just because a caregiver comes from an agency or private business that employs companions doesn't mean that they are "good" or "legitimate". I've known MANY, MANY nurses' aides, companions, etc. from agencies that were HORRIBLE.

Anybody can be a "caregiver"---a friend, a neighbor, family member. They can be employed as an independent contractor, a 1099 employee. They don't need a "business". What needs to be done is the caregiver must submit an invoice for their services on a weekly or bi-weekly basis to provide proof that they were paid for their services & not just given a monetary gift. The best way to pay a caregiver is with a check so there is a record of the payments, and write in the memo area "Weekly pay for [period of time]". A 1099 can be supplied to them for the amount of pay they received in one year by the person they took care of---it is not very difficult & can be done online. However the caregiver handles the income taxes is their own business--as long as they receive a 1099 for tax purposes that proves they received payment in exchange for services. But, this is more for keeping a record of the money your father used for his own care if he ever needs to go on Medicaid & they do their 5 year look-back. Medicaid wants to see that the money he spent on home care was legitimate and not a monetary "gift". The IRS isn't going to come after him as long as he does what he needs to do to document the payments.

I know plenty of elderly people that have live-in caregivers, and the caregivers don't work for an agency. They are independent contractors & get paid directly. As long as there is a record of the payments, you're fine.
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What makes you think she is 'very good'? Please be sure to check references by calling the people. Should be at least 3 people. She should be able to show you a business license and evidence of NAC (Nurses Aide, Certified) or CNA (Certified Nurses Aide) certifications. Check to make sure she went to school where she says she did. People providing care to seniors need to be especially throughly vetted because seniors are vulnerable. Why did she leave her last position? etc. Check with your tax preparer to find out how to hire this person properly.
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dennis, some County's/Cities/Towns require a person to obtain a "business license" before they represent themselves as a business. You can call the County/City/Town to verify if such license exist.
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She also should provide proof of workman's compensation coverage and liability insurance.
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What they tell you means nothing. Get it in writing with her signature. ALWAYS get a written contract, insist on getting her EIN# for the business.
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And don't forget to thoroughly check references.
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You need to see the agency certification from the State.

Every agency must be certified...get that.
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A legitimate business will be willing to provide you with a W-9 providing info to report payments made to an independent contractor. This is a document that gives you, the payor, a tax identification number for the person you paid (the payee), address and name of the business so that you can report the payments you make to them to the IRS on a Form 1099-MISC at the end of the year. You can ask if they are a sole proprietor or incorporated so you can fill out the W-9. If they don't know the terms or are unwilling to fill out the document (which is an IRS document W-9 available on irs.gov), the person is probably not filing taxes and would not be declaring the income from caregiving. Big problem if Medicaid is involved later in terms of being viewed as gifting. A legit caregiver would also be willing to sign a caregiver agreement listing status as independent contractor responsible for reporting own income and paying own taxes, the number of hours to be worked and duties expected, rate of pay per hour, their insurance carrier in case they are injured on the job, evidence that they have coverage in case of accidents, etc. You need to be wary of household help regulations that could hold FIL or YOU responsible for state and IRS payroll tax withholding if they see her as an employee, especially if she later files for unemployment if you fire her even for cause, or she is injured at FIL's home and expects his homeowner's insurance to cover her. Your regular homeowner's insurance policy will NOT cover injuries to a person coming in to provide care as a business and you will need to get a rider on policy if you have caregivers coming in. Lots of things to consider.
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