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My father-in-law received a grant from the VA for his care each month. Not enough to pay for home health, so I stepped in. Yes, I get paid, but am starting to think this was a mistake. But anyway, does anyone know if I need to file a 1099 form or what?

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Adding to GSA's advice on workers' comp issues, not all states will issue riders to a homeowner's policy. When we were considering hiring someone directly, I contacted my agent to ask how to add comp and general liability coverage.

She advised that in Michigan, workers' comp coverage cannot be issued as a rider or as any kind of individual coverage. I would have to purchase a commercial comp policy, just as if I was running a business. At that time (a few years ago), premium rates were $750 to $1000 annually, and increased yearly.

I asked some friends who ran their own businesses and both answered with a resounding NO! Don't get into that kind of situation! If the caregiver is injured and files for comp, it could be an ongoing drain on resources and draw down on funds reserved for short or long term care.

So we abandoned that idea.

There's a difference between someone injured while visiting (invitee) and an employee injured while working. That's apparently the crux of the comp issue.
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VA funds are not taxable to the veteran recipient, but the payment made from those funds IS taxable to the caregiver. Do you have a caregiver contract for the services? This will track payment if Medicaid ever comes into the picture or if your FIL is ever audited by the VA as to how the funds were used.
If you are being paid as an independent contractor, your FIL will need to issue you a 1099 if you are paid more than $600 in a calendar year. He/you will need to file the correct paperwork with the IRS before the due date in 2018 for total of payments made in 2017. You can get the correct forms from most office supply stores with instructions and due dates. You can read about the reporting requirements on the IRS website irs.gov. If you try calling the IRS this time of year, you may be on hold for a loooonng time. You will need to include the caregiver income with your personal taxes when you file next year - offset with the appropriate expenses. It can get complex quickly especially if you have state income taxes that are assessed. This is why many people use agencies - they have office staff to track reporting, carry worker's comp insurance if an injury occurs, and coverage if someone gets sick.
Most homeowners' insurance also requires that you carry a workman's compensation rider if you have paid caregivers in the home in case of an injury to the person providing care. They can decline to provide coverage if you slip and fall and such a rider is not in place.
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ABF, this really is a question for the IRS. Federal statute years ago established that VA funds are not taxable to veteran recipients, but I don't know about a VA grant through which someone who's a caregiver is receiving funds. I.e., the grant funds aren't taxable to your FIL, but when paid out to someone who's not the veteran, I really don't know. This could be tricky; you need to get advice from someone who's familiar with VA grants or payment of VA funds by the veteran to a caregiver.

The IRS used to, and may still, answer questions by e-mail. I've found this is the best way to get answers to a question b/c it's in writing, in case the issue is ever challenged by someone else in the IRS.
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