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Ask Lane Your Own Question
Category: Tax
Satisfied Customers: 12443
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I pay a bonded healthcare person $500 a week to help care for

Customer Question

I pay a bonded healthcare person $500 a week to help care for my wife, a stroke patient. How do I report this to the IRS? Am I also obligated to pay for social security taxes, etc.?
Submitted: 2 years ago.
Category: Tax
Expert:  Lane replied 2 years ago.
Hi,.Yes, home health aides are considered employees of the person who hires them. ... There ARE home care agencies that can set this up turn-key for you.. But yes, you're responsible for withholding and paying all the relevant employee taxes, including payroll taxes, Social Security taxes, and other mandated withholding in your state, such as unemployment insurance.
Expert:  Lane replied 2 years ago.
IRS has an excellent Q&A on this here:
Expert:  Lane replied 2 years ago.
There are two ways to go about this ... hiring the person as an employee or paying the person as an independent contractor ... but if this person works in a way that you prescribe, doesn't have a lot of other clients, must work WHERE you specify (as would be the case here) then you really need to pay them as a household employee
Expert:  Lane replied 2 years ago.
Here's IRS' definition of 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 does not 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 does not matter whether you pay the worker on an hourly, daily, or weekly basis, or by the job.
Expert:  Lane replied 2 years ago.
Then they go further to give examples of household workers (and if you'll not at the end here, the tell you who is NOT a household employee, therefor an independent Contractor).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, andYard workers. Workers who are not your employees. If only the worker can control how the work is done, the worker is not your employee but is self-employed. A self-employed worker usually provides his or her own tools and offers services to the general public in an independent business.
Expert:  Lane replied 2 years ago.
Then, HERE: you'll see exactly what you have to withhold and pay-in
Expert:  Lane replied 2 years ago.
IF you ...Pay cash wages of $1,900 or more to any one household employee THEN you need to ... withhold and pay social security and Medicare taxes..The taxes are 15.3%1 of cash wages.Your employee's share is 7.65%1.(You can choose to pay it yourself and not withhold it.)Your share is 7.65%.
Expert:  Lane replied 2 years ago.
And finally, if you pay total cash wages of $1,000 or more in any calendar quarter to household employees, Pay federal unemployment tax.The tax is 6% of cash wages.Wages over $7,000 a year per employee are not taxed.You also may owe state unemployment tax.
Expert:  Lane replied 2 years ago.
PLease let me know if you have any questions at all ....Lane.If this HAS helped, I'd appreciate a positive rating, by clicking or touching, the smiley faces or stars on your screen ... that's the ONLY WAY I'm credited for the work here.
Expert:  Lane replied 2 years ago.
I’m just checking back in to see how things are going.
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