How do taxes work if I become a caregiver for my grandparents?

Kbelreivins, I know this post was from October of last year, and if you are "working" for your Grandparents, ask if they had spoken to their homeowner's insurance carrier.

Once a homeowner becomes an "employer" they would need to carry a workman's comp policy just in case you should get hurt on the job.

You can talk to a CPA about setting you up as employee and g'mas as your employer. That way you'd file your taxes as usual with taxes coming out of your pay. Or pay you as self employed and gma gives you 1099 at end of year and a copy to IRS. As self employed you would pay what you might owe when you file taxes for the year

Kbelreivins: Perhaps you should seek out the answer to your query via a certified public accountant.

Your grandparents can gift you up to $16,000 tax free. It can be done in monthly payments of $2000. They could gift you $12,000 before Dec 31 which would give you $2,000 for Nov, $2000 for Dec 2022 and $8,000 for Jan-Apr 2023). In May 2023, they gift you $2,000/month for 8 months (May-Dec) which = $16,000 tax free dollars.

No declaration on any tax forms. Also therefore your grandparents can’t write it off as an expense. But no one pays 16% social security taxes, state or federal taxes.

Since gifts are technically no strings attached. You’d also have to get $8,000 before Dec 2022 for care you’d give in 2023). Or you just get $2000 a month = $4000 for 2022 and $16000 for 2023, which leaves 4 months that would need to be paid and taxed OR the grandparents gift your husband $8000 for the last 4 months in 2023.

Just a thought.

If this is your only income and job, you become her employee. She should issue you a w2 and also withhold taxes during the year. You should speak with an accountant about how to do this correctly.

Get an accountant or tax preparer. Important to do so you don't end up owing.
Gena Galenski / Touch Matters

#1 KEEP receipts my cousin our CPA is assisting me w/my elderly mother & taxes...Only reason I mention this is that some states are more lenient on deductions/credits etc if you chose to use
your resources or hers...Prayers

This may seem doable on paper, but I think you are underestimating his care and the fact that his care and your grandmothers care will only increase with time. If he gets up in the middle of the night and needs assistance...who is going to give it to him? If his needs dictated that he should be in a nursing home, what has changed that his care can now be managed part time at home? Part time meaning you are only going to be around for 1/3 of the day.

Need a written contract to avoid Medicaid penalties. See an eldercare and tax attorney.

For some more context:

I understand it’s not a lot of money. I’m doing what I can do to help while still being able to pay some of my bills. I just want my grandfather to be taken care of as it’s mostly him that will need the help. I will not be living with them. He likes to sleep in and wake up about 10:30am every day and goes to bed around 7pm every day without fail. It’ll be about 10a-7p. I have my own place with my own family.

First of all, don't do it. One person cannot do what three shifts of nurses and aides can do. Second, grandma doesn't know how to do payroll and withholding taxes or how to issue a W-2. That will get very messy. Medicaid does not allow live-in relatives as paid caregivers.

That is poverty level at the end of the year. If you need to be there 24/7 then it is slavery. This is a horrible plan. How do you expect to save for your retirement or even health insurance?

JoAnn, just to clarify, independent contractors pay the entire amount for social security and medicare, then they get to do a dollar for dollar deduction for half. That compensates for them having to pay all of it.

There are all kinds of exclusions for paid family caregivers, however, it is important that they set this up with a tax professional and do ALL the filings, this proves it wasn't gifting if Medicaid is ever needed.

Run like the wind in the other direction…..

you should be paid with taxes and social security. W-2 issued. They can either have payroll service or their CPA handle. If they gift you money it would make them ineligible for Medicaid if they ever need it for long term care. And $2000 is not enough if you are going to a live in caregiver.

Each of your grandparents can gift you $15,000 a year ($30,000 total). It's not considered income, so I'd be doing that if it was me.

A Live in caregiver makes at least $2500 a week . I would consult with a CPA or Look up On the IRS website . I am Not sure how Old you are but the Job of taking care of 2 Elderly people is a Lot of work . Just One elderly person is a lot of work . Good for you for helping out your grandparents - Just a heads up Caregiving is usually 24/ 7 work you Might need to hire a weekend caregiver .

Kbelreivins, your grandfather is in a nursing home for a reason, it now takes a village to care for him. If grandfather comes home, that village goes down to one person.

How many hours would you be caring for your grandfather 9am to 5pm, or more likely 7am to 7pm [depending the start of his day]. Five days a week or 7 days? You would need to check on State laws regarding the number of hours a caregiver can work each week.

Best to draw up an Employment Agreement that states what days you work, what hours, what days you have off, your duties, your hourly rate. This Agreement would be very valuable if your Grandfather needs to go back in a nursing home and needs to use Medicaid [which is different from Medicare] to help pay for his care. That way it would show that your grandparents weren't "gifting" you that $2k per month.

I would reconsider caring for grandpa. If he is in a NH he is 24/7 care with at least 3 shifts of people caring for him.

Grandma will be your employer. She needs to make the payroll deductions making sure payments are sent to the correct agency. This means matching SS that does not come out of your pay. You may want to see what a CPA will charge to do this for you. Then he can do a W2 for you.

I would think long and hard about doing this. Caregiving is 24/7. No life of your own. What grandma wants may not be best for grandpa. Talk to the doctor and nurses who care for him.

You would have grandma give you a 1099. Easily done by her CPA.

How did you become the caregiver for your grandparents? Why are you the family member that hasn't been able to work in 6 months?

Why did Grandpa end up in a NH? Was his care too much for you when he was at home? And now Grandma wants to bring him back home, and is dangling the carrot of pay in front of you?

It would be far better for you to work elsewhere and get a real job, salary, and benefits.