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Case Study: We paid the caregiver cash, now she wants a W-2!

Posted by HomeWork Solutions on 1/8/19 3:56 PM
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Case Study_ We paid the caregiver cash, now she wants a W-2!

Our client Nancy M. came to us with an issue regarding prior cash payments to her mother's caregiver and filing proper tax paperwork.


Nancy’s 86-year-old mom lives independently in an apartment. She has mild dementia – enough so that the family hired a caregiver for 25 to 30 hours a week to come in and help keep an eye on things, help her with transportation to doctor appointments and the grocery store, and do things like cook or change the bedding. Nancy’s mom enjoys her time with her and the arrangement is working well.


While most weekday hours are 10am to 3pm, there can be more hours for doctor appointments and other miscellaneous projects that come up. The caregiver texts Nancy every Friday with her hours for the week, and she logs into mom’s bank account to have a check sent out. At the time of hire, Nancy and the caregiver never discussed taxes, just her hourly rate. Now it’s January she wants a W-2 form! Nancy did not realize that her mother is an employer and that there needs to be proper taxes withheld for Social Security, Medicare, and unemployment. Now, Nancy will need to coordinate paying back taxes and she is feeling overwhelmed with how to proceed with getting the right paperwork filed.


Nancy contacted our team at HomeWork Solutions for advice on what paperwork she needed to fill out to get caught up on taxes. With our easy e-signature process, she was enrolled in no time. She learned that she should have been deducting the caregivers Social Security and Medicare taxes all along, and because she didn't do that she is on the hook to pay those taxes to the IRS. While a bit disappointed by the additional expense, she chalked it up to a learning curve and is ready to move on.

Nancy also signed up for our payroll service, so she could make sure the caregiver is paid with her proper taxes withheld going forward. Using our household tax preparation services, Nancy can be assured that the caregiver will have the appropriate deductions made and she also won’t have to worry about filing and paying taxes – HomeWork Solutions will do it all for her.

The Result:

Now, Nancy doesn’t need to read up on different tax laws and regulations; she can simply trust that it is all being taken care of for her, so she can focus on spending time with her mother.

Topics: nanny, senior, CPA

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