an emplyee

[redriverhunter]

My wife has medical problems and can not drive, we have been using a home health service which went out of business. the lady who helps my wife is good with us and we trust her and want to keep her with us. We are considering making it direct between us and the lady who helps us. I have never had an employee and I see this could turn into a nightmare if the government gets evolved social security taxes ect. any experience out there. thanks rrh

[hwilliam01]

A few thoughts, having been in that situation as well. Taxes and record keeping can be a nightmare for employees. One way around that used by my Aunt was for to provide care in exchange for having the house left to her by an elderly couple who lived next door. She provided laundry service, food shopping (and some light cooking), as well as helping mail payments, and Dr's appointments...just general care. This allowed them to stay in their home and she was given t he estate when they passed. Of course this has some pitfalls as well. Leaving it to her in your will allows it to be changed at any time but does avoid her being an employee. You could also not make her an employee, but just help in certain ways, for example, put the money in a trust for her use. You would have to consult a lawyer, but again it keeps her from being an employee.

[Grmps]

You could hire her through a temp agency, or depending on the laws in your state, she could start a business as say maid service or ? then you pay her and she deals with taxes and such

[toallmy]

If she is part time you can give her a 1099 at the end of the year , then she is responsible to file and pay her own tax and social security . Much simpler

[Gus Youmans]

redriverhunter,

I recommend that you talk to a local accountant or CPA who is familiar with the employment laws of your state.

I am a CPA and prepare payrolls and other employee support activities for clients in Georgia and Alabama. In both Georgia and Alabama, the lady helping you would be classified as an employee because you exercise control over her work schedule and activities. She would not be considered a contractor and would not be eligible to receive a 1099-MISC because she is not in the business of providing health care support to the general public. Whether she is full time or part time has no bearing in determining if she is an employee or a contractor.

She would be considered a household employee. For federal tax purposes, things are greatly simplified because you would only have to report her pay and taxes at the end of the year on your personal tax return using Schedule H. In addition, you may be able to deduct the cost of her salary and taxes as an itemized deduction (medical expenses) on Schedule A, if you have enough expenses to itemize. You should make quarterly estimated payments to cover the taxes so that you do not incur a huge expense at the end of the year.

Depending on the laws of your state, you may also be liable for state income tax withholding and payment of state unemployment taxes.

Some people in your situation simply elect to pay their employees under the table and do not report anything to the IRS or the state, while others do as another respondent suggested and incorrectly issue Form 1099-MISC to the employees at the end of the year, making them responsible for all their own social security, medicare, and income taxes. A lot of people who perform in-home health care services are on some type of government assistance, social security, or disability and do not want their wages reported to the government because it could cause the benefits to be reduced or eliminated.

If you want to learn more, go to the IRS website at www.irs.gov and search for "household employees" and you will get access to all sorts of helpful information.

Good luck!

Gus Youmans

[Der Gebirgsjager]

A hiring agreement stating that she is a Private Contractor and responsible for her own benefits, tax payments, etc. is the key.

[Wayne Smith]

A hiring agreement stating that she is a Private Contractor and responsible for her own benefits, tax payments, etc. is the key.

In some states. Check your state law as well as the Federal tax law.

[snowwolfe]

My biggest concern would be what would you do if she claimed she hurt herself working for you? Workmans comp and or disability issues could be a nightmare to deal with.
Medical bills, lost wages, etc.

Address these and you should be good to go.

[toallmy]

Snowwolfe very good point , it gets more complicated .

[phonejack]

Workmanship Comp is a tax in which you don't get reimbursed when you cease business. It is a percentage of gross salary. I never had a comp claim and when I sold the business it was see ya bye see ya as far as getting the money back.

[dragon813gt]

She would see the most benefit by becoming an independent contractor. She would have all sort of tax write offs. As always you should consultant a professional about this.

[Geezer in NH]

Does the word CASH mean anything to you???

No records when all you do is pay cash.

And for the naysayers I guess you have no clue how to be hidden?

[JimB..]

Easy to handle so long as you don’t mind breaking the law and exposing yourself to uninsurable risk. Oh, that doesn’t sound so good?

Well then she could start a business or you could pay her as an employee which involves rather a lot of paperwork. Don’t like that either.

Then I would ask her to get a job at another similar business and then have her assigned to you, works out super simple for everyone. You probably pay the same as before, but I don’t think that saving a few bucks is your primary motivation.

[toallmy]

I'd say she's self-employed house keeper get her mailing address + ss# and a 1099 she would get . You still need to talk to a accountant . Be legal and keep records remember the IRS wants you to be the tax collector so they can hold you responsible .

[AlaskaScott]

Lots of advice here that is worth as much as you are paying for it. You should talk to a local attorney before 1099ing anyone.
I have a business and employees. I pay my payroll taxes through QuickBooks for their fee of $40/mo. Your best two options are to do this or to go through a local company like a temp agency or another medical home health care provider.

[tinsnips]

Just contract her services ,then she has the responsiblty for everything wont need worker comp etc . Problem solved.

[justashooter]

A few thoughts, having been in that situation as well. Taxes and record keeping can be a nightmare for employees. One way around that used by my Aunt was for to provide care in exchange for having the house left to her by an elderly couple who lived next door. She provided laundry service, food shopping (and some light cooking), as well as helping mail payments, and Dr's appointments...just general care. This allowed them to stay in their home and she was given t he estate when they passed. Of course this has some pitfalls as well. Leaving it to her in your will allows it to be changed at any time but does avoid her being an employee.

this is tax evasion.

[JimB..]

this is tax evasion.

To be fair, you’re assuming that she didn’t pay taxes, including self employment taxes, on the imputed income. You’re probably right, but I don’t think we can be certain.

What we can be certain about is that it didn’t really keep her from being an employee, they just assumed that it did and they apparently got away with it.

The law in this are is well developed, there are no simple loopholes.

[toallmy]

I am in no way advocating that Redriverhunter does anything illegal or immoral trying to evade paying taxes or swindling the lady , no matter how someone is paid - taxes are due . Find your local accountant and stop by the office it doesn't have to be complicated . If she does a good job she is worth the effort .

[hwilliam01]

This was back in the mid 60's so the tax laws may have been a little different then (maybe not...I was too young to know). I do know that she paid taxes on the inheritance and that the agreement was not written down or even a formal agreement. She had taken care of them for years because they were family friends and neighbors and they had no heirs and wanted to do something nice for her, but couldn't while they were alive. Could they have been prosecuted for tax evasion...don't know but they and her are long since passed away. She passed away 20 years ago and the others more than 50 years ago.

[redriverhunter]

Thank you for all your replies all advice is taken into consideration rrh

[Char-Gar]

A hiring agreement stating that she is a Private Contractor and responsible for her own benefits, tax payments, etc. is the key.

There is a little more to it than that. It is true that a Contractor is responsible for their own benefits, tax payments etc. However to be OK with the IRS, the person hiring cannot direct the contractor in their daily duties. They are contracted to do a job and they must be allowed to do it their way. If they are directed in their daily duties, they are not a contractor and the IRS will expect withholding and quarterly payments to them.

Bottom line is if a person is hired by contract to do a job, they can't be directed like they are an employee.

[Char-Gar]

My biggest concern would be what would you do if she claimed she hurt herself working for you? Workmans comp and or disability issues could be a nightmare to deal with.
Medical bills, lost wages, etc.

Address these and you should be good to go.

It varies from state to state, but you must have a certain number of employees before you come under Workers Compensation laws. In Texas the number is 3.

In Texas there is no requirement to pay Workers Comp insurance for any number of employees, but if you do not and get sued by an injured employee, you lose the benefits of most common law defenses like "assumption of the risk", "Fellow servant" etc. etc.. Bottom line is paying Workers Comp insurance is a very wise thing to do.

[Char-Gar]

Workmanship Comp is a tax in which you don't get reimbursed when you cease business. It is a percentage of gross salary. I never had a comp claim and when I sold the business it was see ya bye see ya as far as getting the money back.

In Texas and most states Workers Comp is an insurance plan and not a tax. You never get insurances premiums back because there is no claim. Your payments go toward paying the claims of others.I

[shooterg]

I'm sure no one on this board has evaded any taxes.....lol

[john.k]

Nursing assistance is also a fairly high risk occupation for back injury etc......so I would make sure I was well covered against any claim,statutory or common law........IMHO,anyone who does years of care on the promise of an inheritance is a fool....I dont know how many do this and get nothing in the end.....some states give relatives precedence,even distant relatives. Even with a will,you may be talking costly legal action,which claimant heirs wont care about,because it comes out of the estate.....assuming anything is left after the lawyers fees.........

[mold maker]

Any will, whether self written or done by a competent lawyer, is only one contest from worthless. It is only a statement of the subjects wishes.
My advice is to give everything away before you die. It can be done, keeping only necessities until after your death. Make sure you provide for and plan your final expenses. Since no one is guaranteed tomorrow, it's a good idea to take care of it today.
As far as elderly care, set aside for it at the same time.
Simple solution is check book is in a trusted family members name also. This allows me to tend to bills as long as I'm able and the relative otherwise. In my family, the last 3 generations have passed at home, each holding the next generations hands. There's nothing more comforting than to tell them goodbye while holding their hand as they peacefully depart.