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I am thinking of hiring a part-time caregiver but don’t know if I have to do something regarding social security and withholding taxes of insurance. What happens if the person falls or is otherwise injured in the home? Does anyone know the answer?

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KathleenQ: You should pose these questions to your insurance agent.
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jemfleming Jan 16, 2024
Why? So they can raise her homeowners rates or drop her? She needs a payroll company that can also refer her for a workman’s comp policy if required by her state or, if not required, just so she can sleep at night.
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What happens if the person falls or is otherwise injured in the home?
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AlvaDeer Dec 28, 2023
A good question for their insurance agent and a good huge umbrella policy attached to homeowners is always an excellent idea no matter WHO you have into or around your home and no matter under what circumstances. Even a friend can fall with disasterous outcome.
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Confer with tax advisors and/ or an attorney
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jemfleming Jan 17, 2024
There are truly situations where expert help from an attorney, accountant or tax expert is worth the expense. Applying for Medicaid for instance may require expert help. IMO, this is not one of those situations and doing so creates an extra unnecessary potentially expensive wasted step and certainly an unnecessary bill. Anyone can Google the IRS tax rules regarding Nanny’s and home health workers (who, like it or not, are treated the same). Anyone can Google payroll assistance companies that handle the headache of employee payroll and taxes. If you are hiring privately, for substantial regular scheduled hours, the IRS considers your aide an employee (of either the person receiving care or the family member overseeing care) and tax withholding for income, social security, and Medicare needs to be set up. Some states also require workman’s comp insurance- some don’t. The only way to get around this is to hire a home care agency that serves as the aides’ employer and is therefore responsible for those things. You will likely pay more per hour for an agency but they handle the taxes and insurance. Don’t let the promise of a “substitute aide” sway your decision to use an agency. In my experience, that promise rarely works out because most agencies struggle to find a replacement if your scheduled aide calls out. Whether agency or private, sure as the sun rises, there will be times when no one shows up. Have a back up plan. If you hire privately, your hourly cost will likely be substantially lower and all of the wages go directly to the worker, but unless you have experience or a lot of time, you will need to use a payroll service to help you. Care.com is one site that offers both aide searching services and payroll services. There is no way of getting around the IRS rules unless you are only hiring very occasional help. Some people try to call their caregiver an “independent contractor.” Again, Google the rules. You do not need to pay an attorney to tell you that a regularly scheduled private caregiver is an employee under IRS rules. We may not like it - but those are the rules unless changed. Do it right - sleep at night.
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Google care.com and go to their HomePay link. It is a great service that does all the paperwork for you for a minimal charge. They do all the end of year tax forms and direct deposit payroll for you. They also offer workman’s comp insurance. If you are not using an agency for caretaking you need services from a company like this.
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Do you have a contract? In case she needs Medicaid within the next 5 years, you need to keep good records documenting that she is being cared for so that she qualifies.
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Just have a payroll service do the payroll for one. They will deduct the appropriate taxes, Social Security, workers comp

Weekly costs are very small.
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LakeErie Dec 28, 2023
Weekly charges are NOT small. The service itself cost at least $100 per payroll, regardless of you if you have one or 20 employees. A care contract (non-employee) would really be best, but a lot of caregivers don’t like them because then they have to pay their own Medicare and social security tax.

Nevertheless, you must deal with this one way or another. If you hire the person as an employee, you should get the accounting firm who does your tax return to do the payroll for them. They would probably charge less than one of the commercial services.
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With the advice of our attorney we had our caregiver sign a private contractor agreement stating that she must pay her own taxes and that we do not provide benefits, workman's compensation, or any tax withholding. She is responsible for reporting her income and making quarterly tax payments.
We also raised mom's personal injury on her homeowner's insurance to $1 million.
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NoTree Dec 28, 2023
Have you or your Caregiver filed your taxes yet or a previous year? If not caught yet, you will soon be audited and owe FUTA and FICA back taxes plus penalties. The private contractor contract will not hold for your defense. Your attorney's advice is wholly against Fed and most State Nanny Tax Laws. The IRS Pub 926 covers this. If you set the Caregivers hours and/or duties, the Caregiver is considered a Household Employee not a Private Contractor or Self-Employed Worker.
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You will need to go online and search for labor rules pertaining to your state of residence. There are rules that dictates what a contract employee is and there may be rules particular to caregivers.

If your person is only going to be part time and will have other clients, they *may* qualify as a contractor, and so you would pay them straight hours with no withholding and no reporting and at the end of the year you will need to create a 1099 form to give them (due by the end of Jan the following year). Then it is up to the caregiver to report and pay taxes on the wages. You have to report anything over $600 paid out in a calendar year.

Specific labor rules can vary by state and this is an international forum. It'd be best to hire a bookkeeper or accountant, IMO.

You should explore liability insurance to make sure it would cover a regular worker on your premises. My MIL worked PT for an aid agency and fell backwards off a low stool while cleaning (something that wasn't in her job description for that client) and hit the corner of the wall, breaking several vertebrae. There was no end to physical and financial problems for her after that. So, stuff like that does happen. Best to be covered and make sure you have a written contract that outlines exactly what duties the aid will and will not be expected to perform.
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The one thing you need to know is you must match the SS withheld. My cousin found out his SS will be effected because his first employer did not do this.
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Problems abound. As to someone giving care in your home, that is a question for your insurance agent. You need to know your coverage. Everyone should have both homeowners and a good umbrella policy attached to it, and you need to know if a contracted person is hurt in your home what the coverage is.

www.irs.gov will give you all you need to know on hiring household employees, what forms to fill out and etc. Basically you are responsible for doing this under the law, and they will tell you what forms to use. You will also need to obey minimum wage laws for your area, and that can come back to bite you years late with penalties.
So those will be the rules. What you do about following the rules is in your own hands.
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