ASKING THE RIGHT QUESTIONS ABOUT HOME CARE

Q) My parents have a friend who is providing caregiving in their home. They like her a lot, but, I am concerned that they have not addressed who is paying the taxes. S.G- Grand Junction

A)   When using a home health caregiver, it’s crucial to know whether you or someone else is the caregiver’s employer to avoid tax and legal problems. This very topic was recently addressed in a Wall Street Journal article entitled “ What to Know If you are the Boss”. Since there are many arrangements you can make with private caregivers and agencies alike there are some important issues you need to be clear on to protect your assets.
 

In the article Elder Law Attorney –Bernard Krooks of Litman Krooks of NY says,” that many nurse registries or agencies that use independent contractors don’t actually employ or supervise workers; they simply find them and place them in a home setting. Under such arrangements, the family may end up being the official employer, responsible for paying taxes, and other obligations.”  Employing a friend or relative can put a family in the same situation.
 

Many considerations come into play to determine if you are the household employer. Some of the things the IRS will look at are; do you control what work is done, how it is done, when they show up? If the family does control these things, you are building a relationship that points to you as an employer of the caregiver.  If the caregiver was introduced to you by an agency, you need to find out if that caregiver is an employee of the agency or if they are treated as independent contractors.
 

If you pay a household caregiver who is deemed to be your employee, more than $ 1700 in 2009, the tax code requires you to withhold and pay Social Security and Medicare taxes.  (some exceptions apply). That might only equate to about 2 hours a week of service. Furthermore if you pay wages of more than $ 1000 in any quarter, federal unemployment taxes must also be paid.        
    

The homeowner can be liable for these taxes and will also face late filing penalties of 5-25% of the underpayment plus interest. Not to mention possible attorney fees.

Another area of concern is the lack of theft insurance.   An example of this in the news not long ago told of an unfortunate but all too common situation of a caregiver stealing a large amount of money from their client.  When the family called the agency to see how they were going to help, the agency said they are not an employee of ours!   Just because the brochure says “we are bonded and insured” does not mean the caregiver coming into your home is.
 

Speak with your attorney or CPA to get good advice when in doubt. Certainly some good questions to ask the referring agency would be;

Are your caregivers employees of your agency?  If they are employees of the agency, the caregiver’s taxes and insurances will be the responsibility of the agency.
 

Does the caregiver have workman’s compensation in the event of an injury in your home?   You don’t want to be on the hook for medical bills and lost wages. If you cut their hours or let them go can they apply for unemployment that you might be responsible for?     

The National Private Duty Association has been trying to pass legislation to require agencies using independent contractors to provide full disclosure to the consumer as to the status of the worker in the home. It did not pass the Florida state legislature this go round, so you must do your homework.
 

Request a copy of Comfort Keeper’s 20 questions to Ask when hiring an agency brochure at 970-241-8818 Always check with your attorney or accountant .