Are caregivers considered self employed?

Healthcare business resources for your growing business. 

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What is a Caregiver ?

Clarifying what it means to be call a caregiver:

in-home hired employee of the house , relative hired to help, or third-party hired through an agency.

The definition of a caregiver is :

  1. A family member or paid helper who regularly looks after a child or a sick, elderly, or disabled person
  2. Caregivers may be health professionals, family members, friends, social workers, or members of the clergy.

Are caregivers considered self employed?

This question is often looked at differently and can be a topic of debate. According to the IRS, if a privately hired / independent caregiver is paid more than $2,100 per year , they are considered a household employee, not an independent contractor. Views of this topic often are debated by the people looking to hire workers for in home service but don’t want to have the tax liabilities and be responsible for proper payroll. 

Independent workers or contractor (self employed) are 1099 employees who are responsible for all taxes due at the end of the year and are independent. Relationships in the working environment in association to the independent workers reporting to someone or an entity as a boss, being supervised, or being told what to do changes the classification to employee. 

Depending on what the situation is this may be a topic of discussion before any care giver can be considered an independent care worker because in most instances this is not the case of a hired caregiver. 

House hold employer responsibilities

According to IRS publication 926 – household employees, the households will have to withhold and pay social security and Medicare taxes, pay federal unemployment tax, or both. 

The household is considered a business if it employs household employees and has similar responsibilities.  A Corporation or LLC must be formed in order to obtain a proper Federal Employer Tax Identification number (EIN) and state withholdings id (if applicable). Payroll will need to be processed and taxes withheld and paid to the applicable taxation organization. Employers are also responsible for providing W-2’s to employee at the beginning of the year reflecting the previous tax year.

This is the law and needs to be followed.

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