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My 88-year-old mother has two caregivers that work for her.

HI, my 88-year-old mother...

HI, my 88-year-old mother has two caregivers that work for her. One started in 2016 and one began work in 2017. They each made over $5000 last year in 2017. My brother contacted a lady that worked at a tax agency and she completed a 1099-MISC form for the workers last year. However, now we find out that the IRS prefers that a W2 is completed for this type of employee. My question is "What should we do now.? If we start using a W2 at this point, will we be fined and owe for back taxes. How should we handle this?

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Answered in 9 minutes by:
3/16/2018
ABC Accounting Group
ABC Accounting Group, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 867
Experience: Business Consultant/Accounting Manager
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Hi. Great Question. I will be able to help you with this item.

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There are a few exceptions to the W2 rule - such as some medical caregivers.

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Quick Question - are the caregivers family members?

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Customer reply replied 1 month ago
No
Customer reply replied 1 month ago
Also, we live in NC.
Customer reply replied 1 month ago
The caregivers do give some medical care such as help with bathing, medication, changing dressing on her leg for a diabetic ulcer. However, they are not nurses.

Hi.

Caregivers are "employees". If they were through an agency, they would be considered the employees of the agency - no tax obligation for you.

I would definitely start treating them as employees for tax purposes - the quarterly filings for 2018 are not due until April.

Here are some documents. A link to the caregiver rules - https://www.irs.gov/pub/irs-pdf/p926.pdf

The 941 form - https://www.irs.gov/pub/irs-pdf/f941.pdf

The North Carolina quarterly reporting link - https://eservices.dor.nc.gov/vouchers/nc5.jsp

You could also pay to an outside company to do the returns and reporting.

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The only way to not have to do this - is for your caregiver to become an LLC/business.

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Thinking of all of the options you may have.

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Let me know if this helps and if you have any questions. Another option is to have them register with an agency, if possible. Thank you.

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Customer reply replied 1 month ago
Do you think we could possibly be fined for not starting the reporting earlier?

It could be possible; however, I would have a local tax professional who works with wage reporting department on hand - he/she can help with negotiating with the tax department, etc.

ABC Accounting Group
ABC Accounting Group, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 867
Experience: Business Consultant/Accounting Manager
Verified
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ABC Accounting Group
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Category: Tax
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