Yes, if you have been paying the caregiver under the table that money will need to be accounted for to Medicaid.
I would speak with the caregiver and find out if they are willing to accept 1099s for the last 5 years or how many years they have been caregiving. (Not more than 5) then I would contact a certified public accountant or a tax attorney to help you file late returns. Better late than never. It is not the way a private caregiver should be reported, but it accounts for the money and that is 1st and foremost. Don't be surprised if you get some kick back on this.
Hopefully the caregiver has been claiming the income and hasn't been receiving public assistance if not claiming. Because you will be up a creek, they will never agree to help you by accepting 1099s.
This will cause a penalty period for your uncle. Meaning that he will not be eligible for assistance until the money unaccounted for has been spent, meaning that the facility charges xx monthly and xxxx is unaccounted for, the number of months that could have been paid for will not be eligible for assistance. I hope that makes sense.
However, if he is truly unsafe and really requires nursing care you can file a hardship application and it may all be waived and he gets the assistance.
Your best course of action is to start the application and get it sorted out with Medicaid. It is what it is at this point, so I would just start.
Thank you for that info. I have a question for you I have a caregiver 1 day a week on sunday that I or mom have to pay I just stared with her. Is she a household employee or is she a contractor with a 1099 and does her own taxes. Someone told me because I got her off care.com she actually works for herself. I do believe I need to find a cpa to do things right. Mom already on Medicaid but they have no one reliable for the 7th day and I have to work Sunday so mom paid her 1st sunday.
You are being told the same thing over and over. Legal and ethical issues are not your strong suit. Then you put in down on paper for all to see and read. You will probably receive phone calls and possibly visits for your poor judgement.
Start over clean then you have no worries it will work out!
1. If she is paying out of her money, not likely an issue. Medicaid wont consider.
2. If she is paying out of his money, Medicaid will be looking to see where uncle's money went. I have no idea what they do, when she says paid caregivers but has no W-2.
As to starting clean, if he is going into nursing home soon, not certain I would want to make a change.
First of all I’m not going to judge your ethics and second you didn’t give enough info to get a good answer. Everyone here has to “assume” facts and then comment. Most care givers are “independent contractors” and pay their own tax’s on a 1099 form And most caregivers work for an agency that files a 1099 for them. 1099ers are urged to pay their expected tax liability quarterly.
we have to assume she does not have the backing of an agency. Which in itself is really not a good idea because she has not been vetted and very well could steal from you. That being said, unless you give your uncle cash and he pays the caregiver, it doesn’t matter. If you care for him part time, you wouldn’t be paid because your family. The govt expects family members to quit working and care for a family member. You pay this caregiver out of the kindness of your heart. If you don’t work neither of you would be able to pay rent or eat. our govt hasn’t taken that into consideration. You do what you need to do... for yourself and your aging relative. And, it’s been pointed out the govt wants to know his income not yours. As for caregivers I had one who was independent (no agency) and asked why no agency she because they take usually about half of what you make. And these people don’t make much. But I’m boomer years they stay busy. Good luck and bless you for what you do. Sabrina
If you personally pay a caregiver, then no it has nothing to do with his application. Your income is not figured in even if u live together.
Medicaid will look at his monthly income. There is a cap, I think its $2200 in my state. If he is over that, there maybe a way around that if ur State has a Miller Trust or something similar. The monies over the cap go into the Trust and when the person dies, it reverts back to Medicaid.
You don't even mentionvthe caregiver in the application if you have been paying. If asked how he has been cared for up to that point just tell them you have handled that. It has not come out of his income.
Yes, it will be a problem! Medicaid has a look back period, in Missouri it is five years. So you will have to account for all "transfer of assets" for the five your prior the date you made application to Medicaid. What you need to do is see a Elder Law Attorney and make a Caregiver Contract, so that payment won't be a problem when you apply for Medicaid.
Making a lot of assumptions. If OP is paying (and she did say, "I Pay"), Medicaid does not look at her money. If he meets income and assets test, and has Dr. support, he will get Medicaid. They will not care if she paid, she provided care, whatever.
I do not agree with paying people off the books, but it takes a leap to assume that there will be a problem, unless we know more facts.
You know this aide probably doesn't worry about SS. Because, as things stand now in this country, if you don't make enough SS you can get SSI, Supplemental Income, with that you get Medicaid as a supplimental to Medicare. But then, no work history, no Medicare. So probably full Medicaid. With SSI you can get help with HUD housing. Food stamps. The list goes on. So why should the aide worry about that, the government will take care of her/him in their old age.
I think in the years that come, this may change because the Federal government will pull back their money. Illegals will get no help. We will see.
JoAnn29, First we have no idea about the age of this worker. It could be anyone from a student to a retired person. You are not aware of how little you get with SSI & that Trump has cut Food Stamps.... assuming jobs are readily available everywhere for everyone. The county 3 miles from me has 11% unemployment, but Federal Government goes by statewide and National numbers Only! People are suffering. You also don't know how little SSI pays, a few hundred dollars. Basically if your SS is under $600-700...that is a month, not a week, you can get enough to bring you to $750-900 a month. The person posting may not understand bookkeeping and tax law & not have funds to pay a bookkeeper to calculate ever-changing deductions for taxes & reporting. The number of large corporations making money off of people who can file short form taxes tells me that millions of people are not aware of how simple it is, or still don't understand tax forms terms. Postings here show even more really don't understand SS. I worked in finance related fields. Most Self-employed people who do understand tax law at all focus on paying as little taxes as they can. As a result they end up cutting their SS. Or don't think they will collect it. I know most of my adult life & all of my children's lives we have been told not to expect it! No hardworking person forsees a day that they may not be able to find work, or a job they can do! This happened to a friend. Years of legally keeping his business income so Federal tax was low, then years of struggling to keep it open, so no taxes on business losses. Then at 60 and with serious health issues & a dying wife he had to go back to work. With all those Zeros & tiny $$ reported, if he didn't show a certain level of income for 5 years, he would not get above the minimum for SS.
So anyone looking to hire someone under the table needs to talk to them about why. They can choose to be self-employed. If they are not making much over the year, they don't need to file quarterly, or SS & Medicare withholding. Just keep track and report it if they make enough to be required to file.
Also, in states like IL. If that person is hiding income to avoid Child Support, the State will go after the Employer! People need to protect themselves! Undocumented workers all over this country work hard, usually are underpaid, pay taxes included SS, but will never collect on it! Unless they were a dreamer, they risk deportation if they file for benefits they paid into. Please reset you attitude!
PS- I was born & raised in this country. Paid my taxes! Never worked under the table.
Well... I read some of the comments... and they are RIGHT. Paying under the table.... wrong. I have been a caregiver for 25+ years and people have tried to get me to be paid "under the table" but I refuse. I will NOT work for someone like that simply, whey they are dishonest in that respect, they will be dishonest with anyone in any respect, including me. Why would I want to work for someone like that? Also... they may not be considering this...they will NOT receive any social security on that money either because SS was NOT taken out of their paychecks and then when the time comes to collect SS, they will be the first to complain, "How can I be expected to live on THAT?" And the reverse is true... why would you hire someone you KNOW to be dishonest to take care of your uncle? No telling what they are doing when you are not around? And when it comes time that you are caught, she will say that this was YOUR idea..or... she did NOT know that SS and income taxes were not being taken out... who knows what she will come up with! (But then, how did she NOT know when she knows how much she makes per hour and how many hours she works.... that excuse will NOT fly) Learn a hard lesson... the more you lie, the harder it is to keep up with those lies. I hope she has not been working for you very long. Please... find someone who has integrity and be that yourself, too.
I agree with the previous posters. The money you think you are saving by paying under the table may very well come back to haunt you. It is not fair to the caregiver nor to your uncle. The five-year "look back" with Medicaid is very thorough and not forgiving, from what I've read. You are taking a huge gamble with your uncle's future care, and also with your relationship with I.R.S. I'd be way too scared to get myself and a loved one tangled up in this. Think carefully before you continue.
I don’t know how it will affect the application as others said it will depend on who’s money you used. If the IRS somehow finds out, you will be putting a lot more money out. Their state and federal tax share (because they can turn around and say they thought you were taking it out of their pay, a you said, they said situation) You will have to back pay your share (as the employer) of Medicare and Social Security on what you payed them. In some states you have to purchase a workman’s comp policy. We looked at paying on our own and decided in the end to use a agency. Less paperwork, plus hopefully they have a back up person.
Actually the IRS makes the employer pay the entire 15.6% for social security and Medicare if they get caught cheating.
It is not a smart move to steal from the federal government, they can make it very painful for the employer, this is to discourage people from doing these things.
Not only are you committing tax fraud, but "gifting". Without proof you are spending his money for his care, the government assumes it is being gifted. If your paid caregiver falls or CLAIMS to fall in your or your uncle's home the caregiver can sue that estate.
Ironically, your under the table payments will make your uncle's care needs and expenses look less than they are. How will you explain that all of these care hours which have to date been free of charge are suddenly essential and so expensive? And if you've been using your uncle's money to pay the caregiver, how will you explain the gap in his funds?
How long have you been employing this person? I'm hoping it won't be so long that the situation will be impossible to retrieve.
With whose money are you paying? Your money or your uncle's money? If it is your uncle's money then there needs to be a paper trail showing where that money went to for they will want to look over his finances for 5 years. I don't know why you are paying a caregiver under the table or then you are missing the opportunity to take some of that off on taxes as a medical expense. Plus, you are enabling this person to earn money without having to pay taxes on it which is not legal.
Yes.... great answer. Enabling.... people to be dishonest. Sometimes...others cannot be dishonest because others refuse to be. BE that person. I was wondering... whose idea was it to do this "under the table"? The caregiver? If they did, because they are the ones really benefiting from it.... well.... not really. JUST DISHONESTY... FRAUD...STEALING....SS is not being taken out so she will have less SS when she retires.. that is, if she does. She may not have any SS when it comes time for her to retire and whose fault is that?
I would speak with the caregiver and find out if they are willing to accept 1099s for the last 5 years or how many years they have been caregiving. (Not more than 5) then I would contact a certified public accountant or a tax attorney to help you file late returns. Better late than never. It is not the way a private caregiver should be reported, but it accounts for the money and that is 1st and foremost. Don't be surprised if you get some kick back on this.
Hopefully the caregiver has been claiming the income and hasn't been receiving public assistance if not claiming. Because you will be up a creek, they will never agree to help you by accepting 1099s.
This will cause a penalty period for your uncle. Meaning that he will not be eligible for assistance until the money unaccounted for has been spent, meaning that the facility charges xx monthly and xxxx is unaccounted for, the number of months that could have been paid for will not be eligible for assistance. I hope that makes sense.
However, if he is truly unsafe and really requires nursing care you can file a hardship application and it may all be waived and he gets the assistance.
Your best course of action is to start the application and get it sorted out with Medicaid. It is what it is at this point, so I would just start.
I do believe I need to find a cpa to do things right. Mom already on Medicaid but they have no one reliable for the 7th day and I have to work Sunday so mom paid her 1st sunday.
Start over clean then you have no worries it will work out!
1. If she is paying out of her money, not likely an issue. Medicaid wont consider.
2. If she is paying out of his money, Medicaid will be looking to see where uncle's money went. I have no idea what they do, when she says paid caregivers but has no W-2.
As to starting clean, if he is going into nursing home soon, not certain I would want to make a change.
we have to assume she does not have the backing of an agency. Which in itself is really not a good idea because she has not been vetted and very well could steal from you. That being said, unless you give your uncle cash and he pays the caregiver, it doesn’t matter. If you care for him part time, you wouldn’t be paid because your family. The govt expects family members to quit working and care for a family member. You pay this caregiver out of the kindness of your heart. If you don’t work neither of you would be able to pay rent or eat.
our govt hasn’t taken that into consideration. You do what you need to do... for yourself and your aging relative. And, it’s been pointed out the govt wants to know his income not yours.
As for caregivers I had one who was independent (no agency) and asked why no agency she because they take usually about half of what you make. And these people don’t make much. But I’m boomer years they stay busy.
Good luck and bless you for what you do.
Sabrina
Anyone who is privately hired and earns over $2100 is household employee not an independent contractor per the IRS.
Medicaid will look at his monthly income. There is a cap, I think its $2200 in my state. If he is over that, there maybe a way around that if ur State has a Miller Trust or something similar. The monies over the cap go into the Trust and when the person dies, it reverts back to Medicaid.
You don't even mentionvthe caregiver in the application if you have been paying. If asked how he has been cared for up to that point just tell them you have handled that. It has not come out of his income.
I do not agree with paying people off the books, but it takes a leap to assume that there will be a problem, unless we know more facts.
I think in the years that come, this may change because the Federal government will pull back their money. Illegals will get no help. We will see.
People are suffering. You also don't know how little SSI pays, a few hundred dollars. Basically if your SS is under $600-700...that is a month, not a week, you can get enough to bring you to $750-900 a month.
The person posting may not understand bookkeeping and tax law & not have funds to pay a bookkeeper to calculate ever-changing deductions for taxes & reporting.
The number of large corporations making money off of people who can file short form taxes tells me that millions of people are not aware of how simple it is, or still don't understand tax forms terms.
Postings here show even more really don't understand SS. I worked in finance related fields. Most Self-employed people who do understand tax law at all focus on paying as little taxes as they can. As a result they end up cutting their SS. Or don't think they will collect it. I know most of my adult life & all of my children's lives we have been told not to expect it!
No hardworking person forsees a day that they may not be able to find work, or a job they can do! This happened to a friend. Years of legally keeping his business income so Federal tax was low, then years of struggling to keep it open, so no taxes on business losses. Then at 60 and with serious health issues & a dying wife he had to go back to work. With all those Zeros & tiny $$ reported, if he didn't show a certain level of income for 5 years, he would not get above the minimum for SS.
So anyone looking to hire someone under the table needs to talk to them about why. They can choose to be self-employed. If they are not making much over the year, they don't need to file quarterly, or SS & Medicare withholding. Just keep track and report it if they make enough to be required to file.
Also, in states like IL. If that person is hiding income to avoid Child Support, the State will go after the Employer! People need to protect themselves!
Undocumented workers all over this country work hard, usually are underpaid, pay taxes included SS, but will never collect on it! Unless they were a dreamer, they risk deportation if they file for benefits they paid into.
Please reset you attitude!
PS- I was born & raised in this country. Paid my taxes! Never worked under the table.
It is not a smart move to steal from the federal government, they can make it very painful for the employer, this is to discourage people from doing these things.
And he has not paid you, under the table for room and board? You may need an elder law attorney to sort this all out.
If your paid caregiver falls or CLAIMS to fall in your or your uncle's home the caregiver can sue that estate.
How long have you been employing this person? I'm hoping it won't be so long that the situation will be impossible to retrieve.