HOME > VISITORS > ELDERCARE FAQ LIST

My domestic (elder care giver, housekeeper) wants to be treated as a "contractor." Can I do that?

The answer to this question hinges on who is paying the caregiver's wage.

If you are paying for care privately, the simple answer is no. The IRS has strict guidelines to define employees and independent contractors (Refer to IRS Publication 926). Elder care givers and other domestics are generally considered employees. It does not matter how the employee refers to herself or how you refer to her in an employment contract. You are obligated for all payroll tax filings and remittances.

Under common law, a worker who performs services for you is your employee if you can control what will be done and how it will be done. It does not matter whether you give your employee great latitude, but rather that you have the right to control the work. It does not matter if the work is performed on a full time or part time basis. It does not matter whether the worker lives with you or not. It does not matter is he/she is paid hourly, daily or a salary. It does not matter how the employee refers to herself or how you refer to him/her in an employment contract. You are generally obligated for all payroll tax filings and remittances for household workers you pay directly.

The IRS has reaffirmed this stance twice in 1999. In two private letter rulings (PLR 199923014 and 199923015) the IRS disregarded a written contract's designation of a worker as a contractor, ruling that the substance of the relationship and not its label determines the worker's status.

The only workers you can pay directly and NOT incur a tax obligation for are licensed professionals who are coming to your home and providing services in their professional capacity. Examples include occupational therapists and speech/language therapists who are providing these specific professional services in your home to a disabled family member.

If you engage an elder care giver whom you do not pay directly - you pay an agency for example - and the referring agency establishes the scope of work, the care giver pay rate , the agency pays the care giver, and even determines which care giver to send to you, you will generally not be considered the employer of the agency personnel and you will not have payroll tax obligations.

 MORE INFORMATION

For More Information contact HomeWork Solutions, Inc.
at 1-800-NaniTax or e-mail and submit a question.