Caregiver Taxes

With a few of President Obama's cabinet nominations running into some tax issues (issues such as sort of not paying them), questions about tax requirements for household help are being asked.

Basically, just as companies must provide for payroll taxes for employees (the company chips in for part of the taxes along with the employee) to pay for Social Security taxes, Medicare taxes and Unemployment insurance taxes, the same requirement holds true for household employees.  This is often referred to as the "nanny tax" but if you have hired a senior caregiver or even an ongoing gardener, you must provide for these taxes.

Keep in mind that this is also a benefit for the worker, as when they go to retire, they will be able to collect a Social Security check and if they are out of work, they will be able to collect an Unemployment benefit check.  All of these laws were set-up to protect employees.

Another advantage of hiring a Senior Home Care Agency is that the agency takes care of all of these taxes (and you have the added bonus of Worker's Compensation Insurance to cover any caregiver injuries - if you were hiring the caregiver directly and an injury occurred, the senior would be liable and the Caregiver could ask the senior to pay for all medical expenses and ongoing care needs - all of the senior's personal assets would be fair game to cover these costs - you know, yummy stuff for the ambulance chasing lawyers.  Worker's Compensation protects senior's assets if an injury occurs).

Failing to pay these taxes is considered tax fraud.  It is also important to make sure the Caregiver is legal to work and in instances where senior's may have memory loss, it is vital to make sure the Caregiver has passed a multi-state criminal background check and has active management in place. Senior Home Care Agencies go the extra mile to take care of all of these issues to provide a quality caregiver.

Not paying taxes for a caregiver will also cause the caregiver hardship, including being unable to build a credit history because they cannot verify their employment and pay.

The Supreme Court is also hearing a case regarding illegal workers who use fake identity's because they do not have a social security card of their own and this issue has spiraled into a case of identity theft.

What is the old saying:  penny-wise but pound-foolish?  Truly, the few dollars someone thinks they are saving by not providing for a Caregiver's taxes really are a huge loss - a loss in insurance protection, and social security, Medicare and unemployment insurance for the Caregiver.

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Comments (1) -

  • Maggy

    11/12/2009 12:51:59 AM | Reply

    SPEAKING OF CAREGIVERS AND TAXES...THERE MUST BE TAXBENEFITS & DEDUCTIONS THE CAREGIVER CAN TAKE FROM UNREIMBURSED EMPLOYMENT COSTS, TO MILEAGE TO...DOES ANYONE HAVE TIPS OR REFERENCES?  What about caregivers not employted by an agency but providing services to a family member.  Can you address "caregiver Contracts" and do you know of agencies that will actually employ a family caregiver inn0order to cover this person under benefits and support training and development?  I currently care for my mother but would feel better if an agency buffered the transactions.  I wouldn't mind paying an agency a fee to provide these supports for me.

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