Hiring a Caregiver: Why Go Through an Agency?
Most seniors prefer to stay at home as long as possible rather than move into a nursing home. This
usually means they or their families eventually hire a caregiver to look after them. Why choose an agency
like Specialty Home Care when you could hire a caregiver directly?
Tax and Labor Laws: If you hire a caregiver directly, you face serious tax issues. If the IRS determines
you are an employer (and it takes the position that non-medical home care workers are employees), you
are responsible for filing payroll taxes, tax forms, and verifying that the employee can legally work in the
United States. If you pay $1,800 or more in wages in 2013 ($1,900 in 2014) to any one employee, you
need to withhold and pay Social Security and Medicare taxes (7.65% of wages paid withheld and paid
from the caregiver’s wages and the same amount is your responsibility) . If you pay more than $1,000 in
wages in any quarter of 2013, you need to pay unemployment taxes (usually 0.8%, all your
responsibility). You must complete and maintain a copy of Form I-9 to verify the worker is eligible for
work in the U.S. Unless the services meet a narrow “companionship” exception (not recognized by PA),
you must also comply with many labor laws including minimum wage and overtime. Disgruntled
caregivers can use failure to follow such rules against you if they are let go.
Even if your caregiver is considered self-employed, and you pay more than $600 to the caregiver in 2013,
you should report the payments to the caregiver on Form 1099 and to the IRS on Form 1096. The IRS
has successfully pursued taxes from families who hired workers that did not report their income and pay
self-employment taxes. In fact this failure to report is often how the IRS gets involved and often
determines the worker should have been treated as an employee. When that happens, the penalties are
severe. The employee or self-employed issue also arises when a caregiver is laid off and files for
unemployment, or files a claim against an estate. This analysis does not take into account other
state or local obligations.
Agencies like Specialty Home Care treat all caregivers as employees. We pay their wages, withhold
and pay taxes as required (federal, state and local), confirm their eligibility to work in the U.S. and assure
compliance with all work related laws and regulations (such as overtime, minimum wage, etc.).