According to the National Alliance for Caregiving, more than 65.7 million Americans provide informal care for a family member or loved one. Most of us come by the role of caregiver gradually. We start by “helping out” when we notice a parent or loved one is having some difficulty taking care of some routine tasks they once managed well. In time our list of responsibilities gets longer and our loved one needs much more help. And then it happens….we see there is so much more to do than we have hours in the day for. Perhaps there’s been a medical crisis or an accident. We realize some outside help is needed.
Once you’ve made the decision to get help, it’s easy to believe all you have to do is hire someone. If you choose to hire someone directly to care for your loved one be sure you know what goes with your new role as employer. This means that now you have switched jobs from “caregiver” to “accountant” because you will now have to take care of payroll and tax requirements since the IRS views you as the caregiver’s employer. According to foxbusiness.com, if the caregiver you hire earns more than $1000 a quarter or over $1900 a year, you’ll have to file payroll taxes including Social Security and Medicare taxes, Federal Unemployment Tax, state unemployment and disability insurance taxes levied on the employer, and advance payments of the earned income credit if your employee is eligible. These thresholds and figures may change yearly so you will need to verify them every year. You also have to know what taxes your employee has to pay and will have to provide a Form W2 to your employee by January 31st of every year. In addition, you’ll need to pay for worker’s compensation and disability insurance in case your caregiver gets hurt while caring for your loved one.
If the caregiver you hire claims to be working as an “independent contractor” and no money should be withheld for any taxes, they are wrong. According to the IRS an independent contractor has total control over their work hours, their responsibilities, and schedules. This does not apply to your employee because the caregiver will be providing the services you want on the schedule and terms you set. Failure on your part to fulfill your accounting duties as the employer of a caregiver will alert the IRS, set you up for an audit, and can even result in compromising your own personal taxes. You’ll have to pay back the unpaid taxes along with interest and possible penalties. Be certain you make the correct decision when hiring a caregiver. Are you prepared to be an accountant in addition to dealing with all the work and responsibility of caring for a loved one? Share below and visit us at http://www.trilliumhomecare.com