My son (58) will become my caregiver. Would he be considered to be an independent contractor or self employed?

Self-employed means one owns a business so there are certain set of taxes to deal with regarding a business. Independent Contractor means one works on his/her own and deals with his/her own payroll taxes.

I think it is great that you son wants to quit work to be your caregiver. Here are some things to think about if one is trying to decide whether to quit work to care for a parent.... on average if a working person quits work he/she will lose over the years between $285,000 and $325,000 which includes not only loss of salary over those years... it also includes the net worth loss of the health insurance coverage.... loss of money being put into Social Security/Medicare..... loss of other benefits such as matching 401(k).... profit sharing.... workman's comp insurance.... company sponsored life insurance.... vacation pay, sick pay.... tuition assistance, etc. [source: in part Reuters 5/30/12]

Regarding health insurance, chances are he would need to purchase new health insurance on the open market, thus he would not benefit from a group rate that is usually offered by a business. The open market rates are extremely expensive. I remember paying $550 a month with $2,500 deductible, and that was 10 years ago before I was able to get Medicare at 65.

I was wondering, since you are able to pay your son a salary, why not hire a professional caregiver and pay her.... thus you son could still move in with you, continue his career, but will be with you in the evenings and overnight. I would hate to see him retire so young. He could still work another 12-15 years and add to his retirement. It's something to think about.

I can come up with a dozen scenarios about your circumstances that could make this either a workable solution or a terrible idea. You and your son need to sit down with a financial planner and a cpa to go over your specific needs and the tax and financial implications.

Does your son have the skills to be a caregiver?

Are you (and he) going to be okay with him showering you and applying estrogen cream to your intimate parts and changing your diaper down the road?

I'm female and I would not be able to do this for my mom, so much less so my dad.

Think long and hard about allowing or asking your son to give up his career and pension. He is entering his highest paid years of earnings, the ones that will boost his ultimate SS, pension and 403 b.

Make sure the contract is Medicaid compliant just in case you need that later. So pay him the prevailing wage and only for actual hours worked. Your MD must certify that you do need help at home and what activities you need help for. AND you have to issue him a 1099 so he reports the income on his taxes. Too many times the income is not reported and that gets sticky.