Care Takers

  • Caregivers provide support to someone who needs help. It doesn’t matter how many hours per week are spent providing support.  
  • Caring for a family member or friend is not easy, nor is it something most of us are prepared to do.  
  • Learning about being a caregiver may help you provide the care your friend or loved one needs. Courtesy of Caring Connections, 800/658-8898

Who Pays Home Workers Income Taxes?

The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. The earnings of a person who is working as an independent contractor are subject to Self-Employment Tax.

If you are an independent contractor, you are self-employed. To find out what your tax obligations are, visit the Self-Employed Tax Center.

You are not an independent contractor if you perform services that can be controlled by an employer (what will be done and how it will be done). This applies even if you are given freedom of action. What matters is that the employer has the legal right to control the details of how the services are performed.

If an employer-employee relationship exists (regardless of what the relationship is called), you are not an independent contractor and your earnings are generally not subject to Medicare and Social Security Taxes for Self-Employed.

However, your earnings as an employee may be subject to Self-Employment Tax.

For more information on determining whether you are an independent contractor or an employee, refer to the [IRS]section on Independent Contractors or Employees

The IRS continues
that []f]acts that provide evidence of the degree of control and independence fall into three categories:    

1.Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?

2. Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)

3. Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

If you classify an employee as an independent contractor and you have no reasonable basis for doing so, you may be held liable for employment taxes for that worker.

Workers who believe they have been improperly classified as independent contractors by an employer can use Form 8919, Uncollected Social Security and Medicare Tax on Wages to figure and report the employee’s share of uncollected Social Security and Medicare taxes due on their compensation.

The National Private Home Providers Associations has an extensive and well done analysis of the question which home providers are ICs and which are Employees.

My General Rules
When you hire  care taker from an agency and its the agency's employee and when you hire a care taker yourself, and it may be an indpendent contractor. However, every case should be analysed on its own facts by an elder law attorney..