How Hiring Private Caregivers Can Affect Taxes

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How Caregivers can Affect Taxes

When an aging parent or loved one needs care at home, families often have two choices – hiring a caregiver through a Columbus home care agency or hiring a caregiver privately. Families who hire a caregiver privately will not only be responsible for making payments to the caregiver, but for administrative tasks like filing taxes for them.

As the adult child or family member of a senior care recipient, the task of filing taxes for the caregiver will likely fall in your lap. In addition to filling out the correct forms, as an employer, you must make on time payments to the federal government, the state government and social security office. Use the following tips to help you get through the long, and sometimes stress-filled process of completing and filing taxes for your caregiver:

Determining the Status of Your Caregiver

When it comes to taxes, your caregiver can either be classified as a household employee or self-employed independent contractor. To be classified as a household employee, the instructions on how to care for your elderly family member must come from you or another individual who lives with you. A self-employed caregiver will provide their own tools for completing the job and make the determination on how to do it. No one gives them any instructions but them. Your caregiver most likely falls under the “household employee” category because they need specific instructions on what to do.

Checking Status

There are strict laws that expressly prohibit employers from hiring individuals who are in the country illegally. You must protect yourself from any government backlash by having the employee fill form I-9 and provide two different types of identification prior to the start of employment. As an employer, you also need to apply for an Employer Identification Number (EIN) so that all the forms can be properly filed with the government.

Calculating and Withholding Taxes

When you have a household employee, you must effectively keep track of taxes paid and keep records of when they were paid and how much were deducted from the paycheck.

  • Withholding Tax – While you don’t have to withhold any additional funds, your employee might request you to do so. In this case, have them fill out form W4 and keep it on file.
  • Your Tax Obligations – The threshold for paying Medicare and social security taxes. The total amount that must be paid for these two categories is 15.3 percent of the paycheck. The employer normally pays half of these taxes while the employee pays the other half.
  • Unemployment – If you pay your employee an amount above the threshold, you are also responsible for unemployment taxes. This amount can be as high as 6 percent of the total wages, depending on how much the caregiver earned.

Dates For Filing You Need to Know About

On top of the amount of tax you must pay and the paperwork that’s involved, you must keep track of the important deadlines:

  • February 2nd– Apply for your EIN number through the IRS, and mail in Copies B, C and the W-2 form for your caregiver.
  • March 2nd– Send a copy of the W-2 form to the Social Security Administration.
  • April 15th– File Schedule H for Household Employment taxes, and file your own personal taxes as well.

Filing taxes for a privately hired caregiver can add extra work for families in an already stressful situation. If you are thinking about hiring a caregiver privately or are concerned that you are not legally protected with your current caregiver, consider working with a reputable home care agency such as Home Care Assistance of Columbus. Our experienced staff takes care of all caregiver taxes and all of our highly trained caregivers are licensed, bonded and insured. For more information about our hourly or live-in caregivers for Columbus seniors, call us at 614-481-8888 and schedule a complimentary, no-obligation consultation.


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