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Our health insurance company paid our caregivers until the

Customer Question

Our health insurance company paid our caregivers until the end of November Starting December 1st they send us the check and we pay the caregiver.
We pay same amount to the caregiver as we receive from the insurance co.
will this be considered income and will we have to pay any tax or can this somehow be considered a wash with no tax
Thanks
Chuck Thomas ***@******.***
Submitted: 11 months ago.
Category: Tax
Expert:  emc011075 replied 11 months ago.

Hi. My name is ***** ***** I will be happy to help you.

It depends on the arrangement between you and the insurance company. You need to ask you insurance company how they are treating the payments and if you will receive any tax form (1099Misc or such).

Now, paying your caregiver is a separate tax issue. If your caregiver is your household employee, you will be required to withhold some taxes if you pay her more than $1000 per quarter or $2000 per year. You will also be required to pay 1/2 of her social security and Medicare tax.

Here's IRS determination of a household employee:

You have a household employee if you hired someone to do household work and that worker is your employee. The worker is your employee if you can control not only what work is done, but how it is done. If the worker is your employee, it doesn't matter whether the work is full time or part time or that you hired the worker through an agency or from a list provided by an agency or association. It also doesn't matter whether you pay the worker on an hourly, daily, or weekly basis, or by the job.

Household work. Household work is work done in or around your home. Some examples of workers who do household work are:

  • Babysitters,

  • Caretakers,

  • House cleaning workers,

  • Domestic workers,

  • Drivers,

  • Health aides,

  • Housekeepers,

  • Maids,

  • Nannies,

  • Private nurses, and

  • Yard workers.

Expert:  emc011075 replied 11 months ago.

IRS publication 926 discuss household employees in more details:

https://www.irs.gov/publications/p926/ar02.html#en_US_2016_publink100086722

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