Handling paycheck/taxes for an in-home caregiver?

Question

I am about to hire an in-home nurse to help with the care of my mother. As I understand it, I (and/or my mom) will be the nurse's employer, so I'll need to have the paycheck/taxes issue taken care of.

Friends have suggested using an accountant, a pay service, or pay software. If anyone has had any experience with this, please let me know which option you would recommend.

Thanks for any input.

Answer 1

Use a company that provides nurses and they take care of it.

If you don't have such a company in your area, enter into a contractual agreement with the nurse. This way, the nurse (aka the contractor) is paid a flat fee and deals with the taxes themselves.

Answer 2

A regular, in-home caregiver is considered an employee - you can't just agree that they are an independent contractor. Many people do it this way, but it's not legal and could come back later to bite you. There are very specific rules that someone has to meet to be legally considered as an independent contractor, and an in-home caregiver would not be likely to meet those.

Having someone handle your payroll is costly, but might be worth it. i have had experience with Paychex. For a small business, three employee checks once a month, with state and federal withholding and of course social security and medicare, the charge is a little over $50 a month, then additional for quarterly reporting and for annual reporting including W-2's. You could call around a little and see what other companies or ,local accountants would charge.

The person who suggested going through a service might have a good idea - you'd have to check prices. They would handle the payroll issues, but would likely charge an extra couple dollars an hour over what you'd pay someone direct.

Payroll software is very possibly your best, most economical option.

Good luck.

Answer 3

This is a tricky area. Depending on the state you may have to pay for workers' compensation insurance, disability insurance, unemployment, plus at least your portion of Social Security and Medicare taxes (7.65%). In New York, failure to have the workers' comp and/or disability insurance (these are policies through an insurance company) can result in a fine of thousands of dollars.

I have referred clients to a company that specializes in household employees. It's called Nanny Tax. There are others as well.

Another option is to use an agency. If your mother requires 24-hour care seven days a week, this may be a better option. Say the nurse who has the evening shift gets sick, the agency will try to get someone to take her place until she recovers. If you are the employer, then you have to find somebody at the last minute yourself. Also, the agency would do a background check which is harder and more expensive for you to do on your own.

Answer 4

My suggestion regarding this situation would be to hire a nurse on a contractual basis as she would be responsible for her own social security/taxes etc. This can be done but, make sure the contract states he/she is a private contracter and responsible for these issues. You might also consider checking with your home insurance agent to make sure you are covered for accident/liability. That way you dont need an expensive accountant to take care of the mundane matters. Have your attorney look over the contract to make sure it contains all the legal requirements for your state or country. Keep a certified copy and give certified copy to nurse. Make sure the nurse you hire has her own liablity insurance that is required in your particular state thru her nursing insurance agent, she should give you the policy number. When I was familiar with this some years ago you were required to have this insurance when you were an independent contractor, I think the coverage was for 1 million dollars but, not too expensive, maybe 100 dollars a year. Check to make sure the individual has a license as a registered nurse. Lots of luck