There are more than 2 million senior caregivers working in private homes to help our aging loved ones to 'age in place.' These caregivers are employees. They are either employed by the home health agency who hires, schedules and pays the senior caregiver, OR they are the employee of the senior or their family who pay the caregiver directly.
How do you know if your aging family member has household employment tax obligations for their senior caregiver?
Was the senior caregiver hired through an agency? Look through the agency paperwork. A senior care staffing agency who employs their caregivers will proudly advise you that they are paying the payroll taxes, workers compensation insurance and handling the reporting formalities of payroll.
Can't find evidence in the agency paperwork that they are employing their caregivers? Guess what? They probably are not then. There are senior care registries who function strictly as referral agents, connecting clients to home care workers and then collecting a placement or finder's fee for their service. Once the senior caregiver has been placed, the registry is no longer involved in the relationship, which means that the senior or family paying for services is the employer and therefore responsible for paying household employment taxes.
Note that some registries will facilitate the payment transfer between the senior/family and the caregivers, most particularly when private long-term care insurance is involved. This bookkeeping function does NOT make the registry an employer, and if you question them directly they will emphatically affirm this.
If the caregiver is not employed by a senior care agency, you must then determine whether your senior/family paid the senior caregiver enough money to trigger an employment tax obligation. Social Security and Medicare taxes are due if the caregiver was paid $1900 or more in a year. State and federal unemployment taxes will be due if the caregiver was paid $1000 or more in a calendar quarter (and in some states as little as $500 in a quarter).
Our Household Payroll Quick Start Guide is full of helpful information to help you organize your senior's payroll records and move into compliance with household employment tax rules. Our staff welcomes your calls and questions also - we work with families nationwide who what to simplify and streamline this entire process. Call us at 800.636.4829 and you will be pleasantly surprised how easily you can outsource the paperwork and tax filings to a firm that is expert in the area. Do you work with a CPA? Accountants nationwide refer clients to HWS, secure in the knowledge you will be well cared for and that their work will be easier when they assist with your tax filings.