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I am caregiver for my 95-year-old mother who has some dementia and balance issues. She lives with me and cannot stay at home by herself. Our long-time hairdresser/friend (Anna) comes to our home 3 hours per week so I can go out to doctor appts and errands. I pay her $25/hour. She watches TV with my mother and talks to her; mother never leaves her chair during these visits. (We also have a certified home health aide, paid through an agency, who comes for 2 hours 6 mornings and 1 afternoon per week.) Anna started helping us last summer while my mother was recovering from a fall; for several months, she was with us for about 6-7 hours per week, but now it is closer to 3. I believe I need to file a form 1099 for Anna for 2016 but I'm not sure.

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Lynn, it is $600 per year before you have to issue 1099-MISC. If you don't have documentation of the payment of money as income to someone else and it's a gift, then medicaid will include a transfer penalty on the gift to Anna. You might not need Medicaid for your mother now, but if she needs care in a nursing home you don't want a gift transfer penalty to cause problems. Many baby sitters and personal care attendants don't want to declare the income, but it puts the person paying in the position if they want to declare expense on tax return or apply for government help in a bad spot.
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Thank you for your responses. (Sendme2help: I believe the $600 is an annual figure, rather than a monthly one? Also, I think Anna would stay with my mother as a favor w/o compensation (though I wouldn't want to take advantage that way), so perhaps this money could be considered a gift of appreciation. I need to investigate further.
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A person may be able to earn up to a certain amount without claiming it or owing taxes. I think that used to be $600/ mo.
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Is Anna actually claiming this as income?
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Maybe planning ahead for 2017 tax consequences are in order, unless you are just gifting Anna in appreciation. However, if filing for Medicaid, they look back 3-5 years at 'gifts'.
Hope someone has an answer for you.
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Ask Anna how she sees her job with you: 1) Independent sub-contractor, she needs a 1099;
2) hopefuly NOT an employee in 2016 with you liable for with-holding taxes, or
3) under the table income.
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Moving this post to the top of the page. Hopefully someone who has an accounting background can help with this :)
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