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I am guardian of the property for my incapacitated mother. I am hiring caregivers to care for her in my home, and paying them with my mother's money. I want my mother to have the tax advantage of this medical expense.


Who is the employer, for tax purposes? i.e., whose EIN/Social Security do I use as the "employer"?

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It is her money, and as her guardian you are acting on her behalf. Think of her as the company and yourself as her humble functionary, if you will.
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Reply to Countrymouse
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simplyexhausted Jan 17, 2019
Thanks, Countrymouse. Humble functionary is a very good description. :-)
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Agree. Your mother.

Im assuming your are looking at a employer type deduction.

However, a good accountant can find all sorts of deductions to claim and hopefully get enough “medical” expenses added up to qualify for this deduction. As the medical deduction is based from a percentage of income - it sometimes can be a tough one to achieve.

I did experience some frustration with my mother being considered the employer rather than myself. I handled all the money, bills, contact and communication with the home care agency - but as far as the caregiver was concerned - mom was the boss. I guess... technically so.

Still - when my mother had her big fall - The Game Changer - as I call it, all sorts of issues came to light. Things that I feel I should have been told so I could have made arrangements for a higher level of care.

Which, I suspose was my mothers fear as she instructed the caregiver not to tell me about several specific instances- things that screamed “more care”. But there I was - thinking that with the caregivers help, mom was “managing”.

Yeah, right.

Sorry for the aside rant - residual frustrations!
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Reply to Rainmom
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My sister who is POA got our father an EIN. He is the employer. She got a payroll company to pay the employees. She set up workers comp for them too. They are actual employees. Most of them want to be paid under the table, however we want everything to be legal.

I suggest the payroll company BeneftMall PayFocus. They are awesome. I have them do the paperwork for my small business. They bend over backwards to help.

The payroll company takes out taxes and files all the paperwork, which simplifies matters. Her payroll company was difficult to deal with.

Be careful be about over time if you have limited funds because it will eat up the savings.

Employees are more expensive than Independent Contractors, but it makes it all legal.
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gdaughter Jan 20, 2019
Just to say that having someone be an independent contractor can also be very legal, but you still need the appropriate legal papers to back that up and would need something end of year to show what has been paid out. It becomes the contractor's problem to pay all taxes which is a huge hunk of what they've been paid which should be significantly more to cover that. The problem is people who are clueless will not set aside the funds to pay their taxes and wind up, if they file, not having the money to pay taxes...because they have spent the paychecks...I learned about this all the hard way many moons ago when a was newspaper carrier for the NY Times. Quite the shock and it took a repayment plan with the IRS to resolve it, even though it wasn't as huge an amount of money as one would have from a regular job. Taking note of the company you used, thanks!
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Your mothers.
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Reply to tacy022
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I assume it would be your Mom's social security number if she is paying for the employees.

I remember when my Dad had caregivers, his CPA was able to claim the amount for his care at home. But I had gone through an Agency, so the Agency took care of the payroll, taxes, W-2 [1099's], etc. One can hire a "payroll service" to do this for you, but there would be a cost for Mom.

One thing to remember, if Mom hires self-employed [independent contractors] as caregivers, Mom would need to obtain a workman's comp policy through her homeowner's insurance carrier. The workman comp policy helps cover the caregiver should the caregiver gets hurt on the job.
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gdaughter Jan 20, 2019
I wonder if needing to get a workman's comp policy is necessary if we use a local individual to do some light housekeeping every couple weeks?
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It is illegal to hire caregivers as independent contractors unless they have their own agency. The DOL has set out some strict guidelines on it. Make sure you check with your states DOL website to ensure laws are followed, many states have stricter requirements than federal law.

You apply for an EIN under your mom's name because it is her money and you have mentioned you are a guardian but nothing about her being your dependent.

There are alot of steps you need to take for employees and it can take up to 8 weeks to get everything in order.
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simplyexhausted Jan 17, 2019
Thanks, tacy022. She is certainly not my dependent, and all the money being spent is hers, so I guess the answer should have been obvious to me. Registering with the state (MD) as an employer looks like it will take roughly 2 weeks, but I've got the contracts signed, I-9 and W-4's collected, the payroll software set up (Quickbooks) and the workers compensation insurance added to our home policy, so I think we'll be good to go.
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She's paying, she's the employer. You're just acting on her behalf (as POA).
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Reply to IsntEasy
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Be sure, in addition to all you are doing, to keep a record of the hours that you have the aides for your mother that are devoted to nursing care. The IRS defines nursing care as functions that are normally carried out by a nurse. You can't count housekeeping, meal preparation, general companionship, etc. I had to do this for my mother, and I just roughly calculated hours each day that were spent on this kind of care, as well as I could, and multipled by the hourly rate. I kept the data in a spreadsheet. I was able to do a decent job of this even though I lived elsewhere. I had the notes that the caretakers kept and the time sheets, and that was usually enough. Add in whatever you reimbursed the aides for driving your mother to medical appointments--but not to church, for example. All these itms will count toward a possible medical deduction on your mother's taxes.
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Reply to caroli1
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Thank you! Can you tell me what the deciding factor is? I.e., is it because it's her money?
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Reply to simplyexhausted
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Your mother.
Hopefully you are already POA. No cash, all checks for everything, or debit card (for excellent record-keeping).
I went to an elder lawyer for advice. We ended up setting up a trust (I was already POA).
Everything is very simple and straight-forward now, and I don't have to concern myself with probate later on.
Each state is different, check in with an elder attorney.

All the best to you and mom!!
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