If we do a 1099 form at tax time for our caregivers; how does it work for the caregivers?

One more post on this subject. Someone employing a caregiver as an independent contractor when IRS rules and State rules defining independent contractors don't support that can be criminally liable in some states for not carrying worker's compensation and unemployment coverage.

Further, if the caregiver is injured in your home, in most instances, your homeowners insurance will NOT cover their injuries. And if one is employing an independent contractor, they basically become a tenant in your home. Look up the California nanny if you want to vision a world of hurt.

I'm not an accountant nor an attorney. Just a business woman with lots of real-world experience. In my opinion, if you are employing a caregiver in your home, telling her when to come, how long to stay and what duties should be performed? That caregiver is NOT an independent contractor.

Get expert advice or leave yourself open for a world of hurt. JMVHO.

In my opinion, a caregiver could easily claim they were NOT self-employed, and an employer could be penalized and held responsible for payroll tax withholding, social security contributions, etc. Plus penalties. An employer cannot just claim that someone is an independent contractor. Believe me, if it were that simple, no one would be on the books as an employee.

Example: If you hired someone to clean your house? They are your employee. UNLESS they are operating as a company. Ask yourself -- what is the difference?

Anyone contracting with a caregiver directly simply must get expert advice. And this? Isn't it.

You need to make sure that your paid caregivers are contract employees and not household employees. If they are household employees then you must withhold social security and Medicare tax and also income tax if the employee fills out a W-4 form. Read the IRS guide for household employers to determine whether they are household employees. Usually someone is a household employee if you tell them what hours to work and tell them what duties to perform. An independent contractor does the job on their own schedule and how they see fit to do it.

Can you claim a parent as a dependant if they live with you

I am confused as to if I should be receiving a 1099 or not . Im a live in caregiver 24 hours. is this legal?

The majority of self-employed contract labor should be reported in Box 7, non-employee compensation. That is the best way to report it to make sure that there is not a question later as to whether they were an employee and entitled to have you make tax deposits etc. for them. That and a labor contract to support this type of reporting helps protect you for IRS reporting, state unemployment tax reporting, and Medicaid lookback.

If the care giver worked in my home and also did cleaning, do I put the amount paid in Box 3 or Box 7 of the 1099-MISC ?

Thanks to all for your answers. We are on the right track then....lots of documentation and records. We should be good. Deb

To properly fill out a 1099 you should have a W-9 on file for them. Also make sure you keep really good records of the payments and other expenses related to the caregiver.

As long as you provide them with 1099, you should be in the clear. However, it is a good idea to make a contract with the caregiver. Have them acknowledge that they are self-employed and will be responsible for all payroll taxes due.
Also, include their job title - companion sitter; LPN; RN, etc.
Note - to fill out 1099 you will need their social security number; complete address, and legal name.

The caregiver. You are responsible for issuing the 1099 by Jan 31 and it accuracy. You also need to make sure you send of the copies by Jan 31 to IRS and other authorities. The caregiver is responsible for any tax. The point of issuing a 1099 is that they are contracted labor/self employed therefore you are not responsible for withholding taxes. You have done you part. If they do not pay their taxes the IRS will go after the caregiver as long as you filed the 1099 with the IRS by the appropriated due dates.