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Understanding senior care payroll deductions

Posted by HomeWork Solutions on 12/3/19 4:17 PM
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Understanding senior care payroll deductions

Today's families want to assist their aging loved ones to safely age in place, and increasingly hiring senior caregivers to provide care and support is the ideal solution.  There are many misunderstandings and misconceptions about the relationship with the caregiver and their payroll deductions. Many people think that their caregiver is not an actual “employee” and that they can just pay them in cash and call it good. Hiring a caregiver, for your aging loved one, whether they are an live-in caregiver, or one that works a set number of hours per day, means that you will need to understand the importance of senior care payroll deductions. Here are some must-knows about paying your senior caregiver.

#1: Gross pay versus net pay.

If you are paying your household employee $20 an hour for 40 hours a week, you will pay them $800 a week – this is the employee’s gross pay. Many people think that they can pay this full amount and be on their way, but in fact, there are important tax deductions that need to be made on the employee’s check. As a household employer, you are required by law to withhold  social security and Medicare tax from each pay check. Often a family will choose to  withhold the caregiver's income taxes also. After you withhold these, you will get the employee’s net pay, and that total is what the employee should walk away with.

Senior Caregiver payroll is complicated - look to the experts at HomeWork Solutions to handle all the details. 

#2: Know what to do with withheld tax.

After you withhold these taxes from each paycheck, you will need to set aside the deducted funds and send them to state and federal tax authorities when they are due. You must also calculate your employer tax, which you pay from your own funds. This is generally 10% of your employee’s gross pay. These are sent to state and federal tax authorities alongside the forms that you send for your employee’s taxes.

This can get complicated, and most families hiring senior caregivers have multiple demands on their time, from scheduling to health issues, financial management, and the like. Outsourcing payroll and tax reporting to a service like HomeWork Solutions is a wonderful solution for senior caregiver payroll. 

Don’t fall into the trap of “paying under the table.”


Don’t fall into the trap of “paying under the table.” This could get you into some trouble down the road and could cause you to have to pay hefty fines or fees. Do you know that the most common way a family that has been paying cash under the table gets caught is when the job ends - mom or dad's caregiving needs can no longer be met at home or they pass on and the caregiver is no longer needed? Those caregivers, suddenly without a steady income, file for unemployment benefits and the house of cards collapses for the family. 

Unsure of what the details are on withholding the proper amount of taxes each week? We understand that managing your household employee’s payroll can get complicated. This is where our team of specialists at HomeWork Solutions can help simplify the process and alleviate the burden of figuring it out on your own. Our services ensure that you’re doing things right and there will be no mistakes or hidden tax surprises later. We will make sure that your senior caregiver is getting paid accurately. Contact us today for information!

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Topics: senior, CPA

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