My mother moved in my home from assisted living in May of 2022. At that time I was working remote full time, so I was able to care for her here at the same time. She did not want to be in assisted living because my father had recently passed and she was alone and scared there.
In January, my job was eliminated so that put a wrench in this arrangement because I most likely would not get another job working remote; therefore, my mom would have to go back to assisted living. I have 4 other siblings that do nothing to help me, except my brother, because the others say I made the decision to bring her home, so it's basically all my responsibility... It has been a battle ever since then.
I suggested to one my sister, who is her financial medical POA, that I would rather not get a job at this time and continue caring for mom so that she would not have to go back to assisted living, but meant I would need to receive a monthly income close to what I was making. This has been an issue since January, with particularly my oldest sister, who purposely does nothing to help me by taking my mom to give me a break to prove a point that I removed her even though she didn't think it was a good idea!
Now, we are trying to get this caregiver agreement finalized and my oldest sister feels I should be considered an "employee" for taking care of my mom and hire a payroll company to receive a check with all deductions as if I was working for a company. My tax advisor said it was perfectly legal to receive a 1099 and then all I would have to pay is federal and state, but when they mentioned this to an attorney friend/CPA, he said there could be reasons in the future that my mom and/or sister (POA) would be liable in doing it this way. The lawyer would rather see me get a W-2, but my tax advisor/CPA said that was ridiculous! There are different circumstances in caring for a family member vs. taking care of other people, which would then be considered a business.
Here we are in March and cannot get this agreement finalized because of the differences in the way I should be paid; a 1099 vs. a W-2.
Has anyone ever experienced this or is able to help with a straight answer on how this should be easily handled and legal?
I am at the end of my rope.... Thank you!
You are an employee of your mother. IRS considers this type of care an employee situation not a private contractor.
It should be treated no differently than it you were working in the family business. Taxes, medicare etc must be withheld from your payment.
Your tax advisor is incorrect and there are legalities involved that a tax preparer would not be familiar with.
W-2 employees pay 6.2% SS tax and 1.45% Medicare tax and their employer pays the same. 1099 contractors pay both shares and get a small deduction to cover a fraction of the tax. So a contractor nets less unless they charge more.
The payroll processor (hired by and paid for via the POA) will also withhold and submit federal and state income taxes so you don’t have to do quarterly estimated tax payments.
The above applies only to the labor portion of her expenses. Reimbursements for share of rent, groceries, utilities, etc. should be paid separately and are not subject to payroll or income tax withholding.
Get the Nolo Press book on being a contractor from your library if you really want to dig into the details on what special deductions are available.
Or use that money to pay someone else who has experience with your Mom's dementia.
One has to remember, when leaving outside employment, it's a whole different ballgame. I remember reading in Forbes many years ago that one would lose, over the years, $350,000 [probably higher amount now a days].... that amount includes not only salary, but the cost of the company giving the employee health insurance.... company funds added to 401(k)... paid sick leave, and paid vacation time.... stock options if the company offered same... life insurance.... etc.
Does your Mother miss Assisted Living? Miss being around so many people her age to talk to? Miss the music activities that are done by the facility for that era? Plus she had 2 or 3 shifts of caregivers/aides each day. And probably a registered Nurse on-site.
Please note, up to 40% of family caregivers die leaving behind the love one they were caring. Not good odds. Especially if you wind up work 168 hours per week. What would your Mother do if that happened to you? That may explain why your siblings were not in favor of their Mom leaving Assisted Living.
Igloo, a member, is very good at helping in these type of situations.
It seems to me it makes little difference in things as far as the CPA is concerned whether this is "overkill" or not. Your mom's attorney, hired by Sis as POA, is trying to protect Mom and Sis and get you paid; the CPA can still do your taxes. If you like, get your OWN attorney to look at the agreement, and if it is satisfactory sign on. If your Mom were in memory care it would cost her estate a good deal more than this is likely to cost her.
I wish you the best and hope if works out for all. Again, I can see the argument of the attorney, because a POA under the law is not allowed to "enrich" others, their own friends or family, in doing the duty of care as a fiduciary. If your sister were paying you more than say the cost of other care, she could be questioned under the law. If you WISH to do this care and all agree you should be paid for it, then this works for EVERYONE.
Wishing you the best.