How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask TaxWhisperer Your Own Question

TaxWhisperer
TaxWhisperer, Enrolled Agent
Category: Tax
Satisfied Customers: 619
Experience:  Tax Problem Solver extraordinare. I address IRS Notices, Liens, Levies, audits, etc.
63791118
Type Your Tax Question Here...
TaxWhisperer is online now
A new question is answered every 9 seconds

My mother-in law is in a nursing home. We hired a private

Resolved Question:

My mother-in law is in a nursing home. We hired a private aide who comes to be with her. We started with the aide last September, 1 hour a day, 3 days a week. Over time we increased it so that by December, she was coming 4 hours a day, 5 days a week. She is paid an hourly rate. The nursing home pays her out of a spending account that my mother-in-law has at the home, and that we keep topped up. We haven’t been doing anything in terms of tax payments.



1) Would she be treated as an employee or as an independent contractor?

2) If she’s an employee, how do we need to deal with taxes for 2011 (and for going forward)?

3) If she’s a contractor, what, if any, tax information do we need to provide so she can deal with her taxes?

4) What about state taxes – all New Jersey.

5) Anything else we should be thinking about?
Submitted: 2 years ago.
Category: Tax
Expert:  TaxWhisperer replied 2 years ago.

First of all, whenever you ask the IRS "Is this person an employee or a contractor?" The IRS will almost answer "The person is an employee". That being said, there are a lot of factors here that would tend to indicate that you are all set. First off, it sounds like the Nursing Home is paying her from their payables. So I would expect the Nursing Home to be responsible for issuing a 1099. But they are really on the hook for this.

 

Now I can expect you would call up the Nursing Home and say "are you sending her a 1099?" and the silence at the other end of the line.

 

Domestic employees and household help are normally for people that work at your home.

 

This person works at a business.

 

Here are what I think are your options:

 

1. Do nothing and sleep well.

 

2. Issue her a 1099 if you verify the Nursing Home isn't. YOu would need her name, address and SSN.

 

All of her personal aid expenses should be a deductible medical cost.

 

Let me know if you have any questions or comments.

 

Charles

Customer: replied 2 years ago.
Charles,

Thanks for the quick response. I just want to be sure that I didn't mislead you on one item:

You said that "it sounds like the Nursing Home is paying her from their payables." I'm not quite sure what that means, so let me describe the situation in more detail. The nursing home has an account for each resident's miscellaneous spending - say they want to spend $10 at the gift shop, or want to get their hair done, or go on an outing organized by the home. The money in the account is provided from the resident's own funds, or, as in our case, from the funds of a family member. If the money runs out and isn't replenished, the resident can't use the gift shop, get their hair done, etc. As a convenience to us, the nursing home pays the aide every 2 weeks out of that account. If we forget to top up the account, the aide doesn't get paid. I would have thought that the nursing home is simply facilitating the payments, but isn't any more responsible for issuing a 1099 than my bank would be for issuing a 1099 if I paid the aide using a personal check.

Does this clarification change anything in your previous response?

2 related items:
1) If I were to issue a 1099, which am I issuing? I take it a 1099-misc? Where do I get a copy of the form that I can use?
2) You say: "All of her personal aid expenses should be a deductible medical cost." Deductible to whom? I'm paying the aide, so presumably I get the deduction. But isn't there a rule that I can only take a deduction for someone if I provide more than 50% of their support (which I'm not, since I'm not paying the cost of the nursing home, which is the vast bulk of her living expenses).

Thanks!
Expert:  TaxWhisperer replied 2 years ago.

I understood what the nursing home was doing. And I can appreciate why they would argue that "they are just the middle man" and will not be issuing a 1099. Frankly, that's an argument that many intermediaries would make. I think the IRS would see it differently.

 

My point is that it would not be unreasonable for somebody in your situation to assume that the "Nursing Home was handling it", but you are being particularly diligent.

 

You are looking for Form 1099-MISC, there are number of sites on the internet where you can prepare, print and e-file a 1099-MISC for a fee. I think they still have the blank form at Staples.

 

I assume you were paying the aid from her funds, and she was claiming the deduction. My bad.

 

Charles

 

TaxWhisperer, Enrolled Agent
Category: Tax
Satisfied Customers: 619
Experience: Tax Problem Solver extraordinare. I address IRS Notices, Liens, Levies, audits, etc.
TaxWhisperer and 4 other Tax Specialists are ready to help you

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.