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I receive assistance from the office of long term living for my home health care. I also pay my workers additional $3.00 to $5.00 and hour to give them extra money. Do I need to need to take out their taxes on that additional money or can I pay them under the table? Can I also write that additional money I pay them off on my taxes as a medical expense?

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Totally off topic but I have a compulsion to correct a statement.

Higher Tax Bracket" drives me crazy because people misunderstand it all of the time.

We have a progressive tax rate. People think that if the tax brackets are $0-$25K = 10% tax bracket*
and $25,001-40K = 20% tax bracket then someone making $24,999 will pay $2499.90 netting them $22,499 after taxes.

And someone making $25,001 jumps into the 20% tax bracket and pay $5,000 netting $20,000 in pay.

So we are all afraid of going into the next tax bracket and coming home with less money.

That is not how it works at all.

Your first $25K is taxed at 10% and your last dollar is taxed at 20% so your tax liability is increased by 20 cents. And in the end, you are still making $.80 more than you would have for that last dollar.

*Tax brackets and tax rates used in this example are totally fictional because I could not be bothered to look them up just to explain this.

Next week on Finances with Mom2Mom we will discuss how that giant overtime check is not really taxed more heavily than regular pay (it just feels like it)
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You need to talk to an accountant to determine if these workers are employees l. Unless they work for a company that withholds taxes, etc, they may very likely be employees. Then you would be required to pay the employer tax portion, Medicare, workers comp, unemployment, etc.

Then the issue with extra money. I don't think they will claim the additional money as it is tax free if they don't. But, if you should end up having to apply for Medicaid if they were to discover this, it would lead to a period of ineligibility with payback required before you could be covered.
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People being paid under the table typically DO NOT declare everything they make. I'm not saying it's right, but it's true. If you are paying them extra it is up to you as to whether you are going to be upfront or not, with the IRS. Sometimes that extra $3-5/hour, if reported, means the receiver goes into a higher tax bracket. And, I may be incorrect, but if you are receiving "assistance" wouldn't the office of long term living be interested in the "extra" money you are paying?
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I would pay taxes on it, as stated above. If those care providers ever file for unemployment they will declare the additional amount as their unemployment benefit will be determined to be higher. Don't take any chances with Uncle Sam. Most of the time he wins!
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If those workers at some point decide to file unemployment.... then the total amount you really paid will be revealed. And YOU, not them are on the hook for all the withholding taxes plus fines and penalities.

Since there is no down side for the unemployed aide to not declare all the money...and an upside (more compensation benefit), you can be sure they will declare the whole amount. This is the most common way people get caught cheating on the tax withholding (and social security too).
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