As a trustee, do you manage or issue payroll to a beneficiary’s caregiver? This type of employment situation requires that you understand and recognize the importance of legal and tax obligations that this brings to the trust as well as you as the individual trustee. If you’re the trustee, you’re automatically held to a high standard of performance and you could be held accountable for any actions that cause risk to a beneficiary. This means you may even be financially responsible for any negative consequences. So how can you best manage trustee risks when hiring private caregivers? Here are some critical issues that you’ll need to remember when it is hiring time.
Hiring a caregiver or nanny as an independent contractor is tempting, but be careful, because this will violate tax law and can create a very risky situation for the trustee. A person that is hired as a private caregiver should almost always be hired as an employee, not an independent contractor. Misclassification enforcement (classifying an employee as a contractor to avoid taxes) is at an all time high, and according to the US Department of Labor two-thirds of misclassification investigations result from worker complaints.
If you have a household employee, most states will require that they are protected with Workers' Compensation Insurance and if you don’t, this could be considered a criminal offense. In addition, nannies or senior caregivers have a particularly physically demanding job and could be at greater risk for injury because of the type of care services they provide. Therefore, this type of coverage is very important because it provides remedy for an employee if he/she sustains damages or injury on the job. HWS will facilitate Workers' Compensation coverage for household payroll clients.
Payroll tax responsibilities are very similar to business employers, but there aren’t human resources or payroll departments to help you with advice and guidance on how to go about managing these taxes. Household payroll taxes can be very involved and often have rules that are unusual and specific to household employees. HWS Complete Payroll Services will let you completely outsource this task with confidence.
If you don’t understand how to go about managing payroll taxes, be sure that you contact HomeWork Solutions to speak to a payroll specialist so you know that you’re covered when it comes to taxes, insurance, and other legal matters. Our team of specialists has decades of experience to help assist you in getting your financial and legal matters in order so you can have a successful privately employed caregiver.