Health Care Aide and taxes


R

ramridge

My 93 year old mother-in-law has just hired an aide to help
her in her apartment. She lives in Oregon. The aide will set
her hours - though MIL has specified the number of hours -
currently 10 or less. Aide will more or less determine what
is done during those hours, but MIL will have input. Aide
does other work, though none of it in the health care area.
She is not licensed in any way.

There's a host of concerns I have, but these are the tax
related ones.

Is there any justification for her not being considered an
employee?

As I understand it - as employee MIL will be required to get
an EIN number, to pay 1/2 of Soc Sec, etc and to provide her
with a W-2. If we can justify classifying her as a contract
worker, how do we guarantee that she is reporting income on
her tasx return? In reading instructions for a 1099-MISC it
appears that they are only issued by businesses?

Thanks for any help.
Midge
 
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H

Harlan Lunsford

My 93 year old mother-in-law has just hired an aide to help
her in her apartment. She lives in Oregon. The aide will set
her hours - though MIL has specified the number of hours -
currently 10 or less. Aide will more or less determine what
is done during those hours, but MIL will have input. Aide
does other work, though none of it in the health care area.
She is not licensed in any way.

There's a host of concerns I have, but these are the tax
related ones.

Is there any justification for her not being considered an
employee?

As I understand it - as employee MIL will be required to get
an EIN number, to pay 1/2 of Soc Sec, etc and to provide her
with a W-2. If we can justify classifying her as a contract
worker, how do we guarantee that she is reporting income on
her tasx return? In reading instructions for a 1099-MISC it
appears that they are only issued by businesses?
First things first. The aide will be an employee in your
mother in law's house and therefore your MIL will file a
1040 along with schedule H to report appropriate FICA, and
federal withholding if they so agree. Also she probably
should check with state unemployment tax people, for there
probably are concomitant taxes there.

No justification for being an independent contractor that I
know of. No matter who decides what the aide does or does
not do, the fact is, and this controls, that your MIL has
the right to control.

ChEAr$,
Harlan Lunsford, EA n LA
 
Last edited by a moderator:
P

Phil Marti

My 93 year old mother-in-law has just hired an aide to help
her in her apartment. She lives in Oregon. The aide will set
her hours - though MIL has specified the number of hours -
currently 10 or less. Aide will more or less determine what
is done during those hours, but MIL will have input. Aide
does other work, though none of it in the health care area.
She is not licensed in any way.

There's a host of concerns I have, but these are the tax
related ones.

Is there any justification for her not being considered an
employee?

As I understand it - as employee MIL will be required to get
an EIN number, to pay 1/2 of Soc Sec, etc and to provide her
with a W-2.
Correct. Many household employers just pay all the
SS/Medicare without deducting the employee's share. Federal
income tax withholding applies if both employer and employee
agree. There are also state unemployment and workers'
compensation issues which may have to be addressed. Details
are in IRS Publication 926.

If your grandmother does pay employment tax, it's a medical
expense on her Schedule A.
If we can justify classifying her as a contract
worker, how do we guarantee that she is reporting income on
her tasx return?
You can't. For information on the common law tests for the
employer/employee relationship, see IRS Form SS-8.
 
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R

ramridge

It's not the answer I wanted, but it is the answer I
expected.

I downloaded the Schedule H and looking at the top three
questions, it looks like she will be under the threshhold to
report this year. She'll pay out $600 to $800 this year.

Knowing this can she not withhold the Soc Sec for the
employee - and start next year? If she does withhold this
year just in case the total goes up, would she just return
the withheld amount to the employee in her last check of the
year?

Thanks, Midge
 
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