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It's her money, why should the government care? My friend has her own medical coverage and a PT job. Isn't this just like hiring a baby sitter? I've been reading about independent contractors and employees. I've got enough issues without becoming an employer and dealing with tax issues. What can be done so we can keep her on? This whole issue of once she makes so much we become an employer boggles my mind. Can't we just do what we want with mom's money?

I would suggest talking to a lawyer in mom's (your?) state to find out all the legal ramifications. Probably get a contract drawn up that outlines the details. Lawyer will be able to help you with this.
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Reply to Taarna
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The IRS has a long tradition of "caring" about taxable monies.
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Reply to rovana
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Here's how your friend can get paid without the government getting involved.

KEEP YOUR MOUTHS SHUT.

You, your family, and your friend who's willing to take care of your mom part-time don't have to be announcing your business to the whole world, now do you?

There isn't an in-home caregiver (agency or private) in the world who hasn't taken a little bit of cash pay here and there. In fact, there are actual care agencies that find caregivers for clients who are paying in cash. They demand a one-time per job fee from the people they find the jobs for. I can't even say "employees" because they don't actually work for the agency nor do they get paid by them. I may or may not have taken work like this over the years from such agencies that are a very quiet and exclusive community. The pay is always top and so are the caregivers. Only the best, but if you do anything wrong, you're blacklisted and never work privately again.
Does your mother qualify for the paid family caregiver program that states have through Medicaid? If so, then you collect the money (which is non-taxable) in your name and take care of your friend who's taking care of mom.
There are plenty of ways to get around a situation like yours. You just have to be creative. Ways like buy her a Visa Gift card every week and pay her that way. Or literally give her an envelope of cash with your compliments.
If the time comes when mom needs to be on Medicaid, and the five-year look back period hasn't passed yet, tell them the weekly withdraws were because she ate out all the time. Or she went to bingo, did casino gambling, or bought large numbers of lottery scratch tickets every week (like so many seniors do). The point is there's no way to prove or disprove these things. There's no way to prove or disprove your friend getting paid in cash either.
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Reply to BurntCaregiver
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rovana Aug 20, 2021
I'm sure that "under the table" is very common. However, I personally have seen the consequences when a federal prosecutor starts asking questions. Thing is, a simple, commonly used plan can be blown sky high by the odd glitches that happen all too often in life. Give the whole thing very careful consideration.
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Since your friend has another job, how do you plan on using her. Just a few hours a day? I know for a fact that aides work under the table. Yes we should follow the laws, but I doubt if people do. If your friend does not mind doing it this way then do it. Do you think Mom will ever need Medicaid? If you are willing to care for her to the end or she has the money for care then do what you want. Just be aware if she ever tries for Medicaid, you may need to explain the large amount of money coming out of her bank account every month. There will be penalties.
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Reply to JoAnn29
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I read your past posts. Your mother lives alone, so without anyone there, do you think she she is in danger? A few months ago you considered taking early retirement at age 62, but didn't (good move!). You left the door open for Family Medical Leave -- is that what you are considering now?

You have two brothers. You mentioned in an earlier post that you are the one who does things for your mother. Why don't those two do anything? Or do they?

What are the long-range plans for your 86-year-old mother? Do you see a facility in her future?
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Reply to CTTN55
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Its called tax evasion and at some point your friend will have to declare the income and you will have to account for the expenditure. You can have your mother pay you for the time you spend caring for her, if you do not earn the threshold at which tax becomes payable on income (sorry I am in UK not sure if you have such a limit in the US). Once the money is paid into your account how you spend it or give it away is up to you. Ask an Elder lawyer how much you can be paid, keep a record of it each week (just a note book), transfer it to your account and then you could give it away how you like to someone who helps you out as a thankyou. But any help a friend gives won't be insured. It all depends how much assistance your friend is willing to pop in and give, a few hours can be as a friend helping out for which you say thank you, buy yourself something nice, but regular fixed hours working needs to be declared to IRS - link to whom Frebrowser has given below.
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Reply to TaylorUK
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BurntCaregiver Aug 18, 2021
TaylorUK,

Nobody is going to have to declare anything if they can keep their mouths shut.
We're not talking about laundering millions of dollars in drug or organized crime money.
We're talking about paying a friend to help out part-time with the mother.
If mom isn't getting any services from the state and there aren't any people like social workers and care agency nurses involved, she can spend her money on anything she wants because it's her money.
If she or her daughter (with mom's permission of course) withdraw a few hundred in cash each week and give the friend an "envelope" they don't have to answer to anyone where that money is going.
They can pay the friend by Visa Gift Card every week if they want.
Trust me. There are ways to get around it and no caregiver (agency or private) has never at some point accepted a cash job.
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I new a woman who had to pay about $5000 in penalties to the IRS for paying under the table to caregivers.
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Reply to brandee
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BurntCaregiver Aug 18, 2021
brandee,

Either the woman you knew wasn't discreet about paying her help or her help wasn't. Somebody ran their mouth to someone. That's why she got in trouble. Or she tried to claim a deduction on her taxes for what she paid out for caregivers.
When people are discreet and keep their mouths shut, it works out.
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In addition, unless Mom has a LOT of money and has no chance of needing Medicaid in the next five years, you should have a care contract to document that the payments are not gifts.

Regarding babysitters over 18 who are not specific family members,
Here is a link to the IRS
https://www.irs.gov/taxtopics/tc756

There are a number of businesses that will handle payroll taxes for you if you don’t want to do it.
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Reply to Frebrowser
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igloo572 Aug 17, 2021
Average stay in a NH is 2.5 years.
if NH in your area run $ 10k per month, that’s $ 300,000 needed.
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However you work this out make sure you have an insurance policy to cover yourselves in case she gets hurt caring for your mom. I have a rider on my house insurance that covers contractors I might hire to do work in the house or on my property. It only costs $100 a year for one million dollars of coverage. This protects you if the contractor doesn’t carry his/her own injury insurance.

Plus paying her without contributing to Social Security just hurts her in the future by reducing the amount of retirement funds she will get. Your payout is based on how much you contribute.
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Reply to Frances73
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If you're employing someone for a service, then yes, you are an employer.
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Reply to ZippyZee
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You don't supply Health insurance but ur responsible for taxes being taken out, SS and matching it. If you don't have a contract in place you will have problems with Medicaid if u ever need it.
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Reply to JoAnn29
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BurntCaregiver Aug 19, 2021
JoAnn29,

Homecare agencies do not supply health insurance to most of their employees. That's why they keep the aide staff who works in the people's homes part-time only.
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In this country a caregiver is ALWAYS an employee. IRS rules.
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Reply to gladimhere
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No. In my state a caregiver is never considered contract (or freelance) no matter what. You are their employer. Do not get sideways with the IRS. Please find the information for your state, probably on the website for the Dept of Health and Human Services, elder services. For the record, I would like to be able to hire people as contractors for my business but the government also dictates to me who is considered an employee and who is not. The bigger the government, the smaller the citizen.
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Reply to Geaton777
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Not legally you can’t. Doesn’t mean people don’t do it but it’s ill advised for multiple good reasons
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Reply to Daughterof1930
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