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Long term care facilities are cheaper than hiring someone to take care of someone at home all day and be on call all night , so Just do the mathematics , and they can only stay at home if they can get around and only have nurse come around once a week to check up or give a bath , or if they cannot walk or they need help then the long term care with the Doctor advice will be the answer
Please don't put mom in a home because you are too cheap to pay someone to care for her at home.
You can do it without the agency for much cheaper even if you do pay her taxes.
The caregiver is already retired, and does not need or want SS taken out of her pay. She only wants a bit of extra money. Believe me, I am in favor of making the underground economy pay their fair share, but sometimes it gets carried away.
If I were OP, I would pay for a consult with an accountant, and see what my options are. I would probably pay her cash unless it would prevent me from writing it off, or qualifying mom for Medicaid later, etc.
You might just get off by issuing a 1099 at the end of the year. The caregiver would need to claim the income, but perhaps that is all you would need to do.
The caregiver is already retired, and does not need or want SS taken out of her pay. She only wants a bit of extra money. Believe me, I am in favor of making the underground economy pay their fair share, but sometimes it gets carried away.
If I were OP, I would pay for a consult with an accountant, and see what my options are. I would probably pay her cash unless it would prevent me from writing it off, or qualifying mom for Medicaid later, etc.
You might just get off by issuing a 1099 at the end of the year. The caregiver would need to claim the income, but perhaps that is all you would need to do.
If you issue a 1099 it will be the worst possible situation for the HCA. They will need to pay lol I'd the taxes, plus SS, plus the employers portion of SS.
Note: If you work for the IRS this is a completely hypothetical situation.
My friend recently hired a Home Care Aide (HCA) for her elderly mother. It was set up as sort of a trial period for a month to make sure that it works out on both sides. My friend is fairly confident that the person that she hired is honest and trustworthy. Although, my friend did not know her personally she is a friend of a good friend. My friend did her due diligence and checked numerous references (I believe at least six). Although the person hired is not a licensed anything (aide/nurse/whatever) she used to work in a somewhat related field and had hands-on experience being care giver for her mother (before she died). Plus, my friend's mom really liked her during the interviews and enjoys her company now. It has only been a short time but both my friend and her mother are happy with her.
Now, the question of wages. The woman that they hired has recently retired. She has health insurance and a pension and was just looking for extra income to pay off some bills and agreed to work for $15 an hour cash which my friend felt was an appropriate payment for the area & the responsibilities. However, now my friend is getting a little panicked as she is worried that either she or the HCA or her mother may get into trouble, for example with the IRS for paying someone "under the table". This is totally new to her and none of her friends have any experiences in this area either.
Everyone that I know/knew either provided the care themselves for their parents for free or paid workers through an agency or their parent went into a nursing home so I could not give her any advice. My friend asked me to "ask around" to get some feedback on this issue.
So, if you have knowledge in this area, what are the possible problems in paying in cash? Does anyone know what happens if someone is caught either paying in cash or receiving the cash? I am guessing that it would be pretty unlikely that anyone would find out about the money but already a number of people "know about the job" for example all of the references that my friend checked and I'm guessing that it may come up in conversations that the HCA was a "private hire" vs. through an agency.
There are also other people coming into the home (OT/PT/Visiting Nurse) since her mother was just released from rehab and they may or may not ask what agency the HCA works for. Would they "turn in" someone who they though was being paid "under the table"?
My friend said that she really, really does not want the hassle of having to do all of the paper work to actually hire the person as an employee or even do a independent contractor/1099/whatever employee form plus it would be pretty likely that the HCA would then ask for a much higher salary if she needed to declare the money as income. But, my friend is worried that if the IRS does find out there may be huge fines. Would that be fines for the HCA for not reporting the income or fines to the person paying the "money under the table" or for both???
Or is it a gamble, don't fill out the forms so the HCA does not declare the income and hope that nothing happens? How common is it for HCAs who are paid "under the table" to be caught? And if they are caught, what happens?
Since this is a month long trial (probation) period my friend said that it would be a natural transition time to talk about payment and possible changes at the end of the month.
Thank you for your comments. She lives in Wisconsin (if that matters).
Mashed Potatoes
(side note: recently a huge restaurant in our area was caught paying many of it's employees "under the table" and the restaurant will have enormous fines and may even have to shut down. So my friend is understandable nervous about doing the same thing.)
Well, I don't know how common this is, but in jobs I had where I was paid in cash, I still filed my taxes. It was a long time ago, so maybe it works differently these days. I can't place exactly how it's worded, but along the line of 'income for which you don't have a 1099.' And as it's considered being self-employed, it results in paying self-employment taxes.
I am sure both parties are aware of what they are doing and are OK with it at least until something goes wrong. They are making an informed choice. I cannot imagine that anyone doesn't realize that paying under the table is illegal. People can get along really well until something goes wrong. If either of them mention this to someone else and it gets around, don't be surprised at what results.
I would not spend my time worrying about their situation since they chose it. Could the elderly mother qualify for Medicaid in addition to Medicare?
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