It's been called the Silver Tsunami - America's 65+ demographic, which currently accounts for 13 percent of the overall population, is expected account for more than 20 percent by 2050 according to the U.S. Census Bureau. Three quarters of that population strong prefers and expects to age in place, remaining in their homes and communities as long as possible. Many families turn to senior home caregivers to help their loved ones remain independent in a safe environment, especially when non-medical support is called for.
Once the caregiver is hired, questions remain about how to handle the senior caregiver's payroll. Families turn to senior home care referral agencies, accountants and geriatric care managers for guidance. HWS has heard some remarkably bad advice on senior caregiver payroll, advice that when followed often comes back to haunt the senior or their family members.
The Worst Advice We've Ever Heard About Senior Home Caregiver Payroll...
ADVICE: Senior home-care workers are independent contractors and do their own taxes.
Not only is this advice factually incorrect, but following this advice can be very expensive. Virtually all senior caregivers are employees - either of a senior care staffing agency or the party paying their wage. If you engaged a senior home care agency to find your caregiver, carefully question them about payroll or insurance. If they do not have the caregiver on their agency's payroll, and you pay the caregiver either directly or through the agency, you are their employer.
Household employers are responsible to follow all tax and labor laws, both federal, state and local. Tax compliance is often confusing, and many employers of senior caregivers don't even know where to start. Consider outsourcing to a household payroll compliance expert and avoid the stress and worry about payroll tax reporting.
ADVICE: Just pay the senior caregiver a salary to keep it simple.
Most senior caregivers are legally considered hourly employees, and most are protected by minimum wage and overtime laws. Paying a salary sounds simple - that is until the caregiver complains about unpaid hours when she stays late one day, or about unpaid overtime when she works more than 40 hours in the week.
ADVICE: Everyone pays their caregiver under the table - taxes are too expensive for everyone.
While taxes are undeniably an expense, paying your caregiver on the books keeps you on the right side of the IRS, and protects you and your family from liabiltiy. When you pay your caregiver legally, your caregiver will have the protection of unemployment insurance coverage when they are no longer needed and the job ends. If your caregiver is injured on the job your workers' compensation insurance policy will pay the caregivers medical bills and lost wages. When you pay under the table, unemployment and workers' compensation insurance are not in place and these expenses may fall directly on you or your family.
If you or a family member are considering hiring a senior caregiver, we encourage you to do your homework. HWS offers free telephone consultations and we love helping families understand the rules.