Hiring Caregiver Help Without an Agency

When using a home health caregiver, it is critical to know whether you are considered the employer of the caregiver, or an agency is. This is the only way to avoid tax and legal issues, commonly called the “nanny tax”.

The In-Home Care industry is booming with a wide range of services and just as many contractual agreements and employment policies. Consumers must ask questions up front about tax obligations and insurance coverage, or run the risk of tax penalties. If you privately hire a caregiver, and you pay the household caregiver more than $1700.00 in 2009, the tax code requires you to withhold and pay Social Security and Medicare taxes. The few exceptions typically do not apply to caregiving for aging parents.

However, even if you use an outside party, such as a home health agency, it doesn’t mean you are off the hook. Many of these agencies do not actually employ or supervise these caregivers - they simply find and place them. Under these circumstances, you are considered the employer and are responsible for paying taxes and other obligations.

Employing a relative or a friend can put you in the same situation. If you dictate when the caregiver is on duty and supply the equipment for proper care, you are building an employee-employer relationship, even if the care is part time.

If you pay the caregiver more than $1000.00 in any quarter, federal unemployment taxes must be paid. State and unemployment taxes must be withheld and paid as well. If unpaid, the tax payer will be responsible for what is owed and will face late filing charges between 5% and 25% of the underpayment plus interest.

Consumers can avoid tax snags if they pay an agency directly and that agency is the caregiver’s official employer. A geriatric case manager can also serve as a caregiver’s employer, if they screen, arrange, monitor and pay the caregiver on your behalf.

Employee injuries pose one of the biggest financial risks. If you serve as the employer and have no workers compensation and the caregiver is hurt on the job, you can be responsible for medical expenses and disability. Do not assume that your homeowner’s insurance will cover this; you may need to buy general liability insurance. Discrimination or harassment suits pose another risk.

Our Quality Providers can help you find a Home Care Agency that will work as an employer for the caregiver in your home.