Who is the "employer" of Mom's caregivers? My mother or me?

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Who is the "employer" of Mom's caregivers? My mother or me?

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I am guardian of the property for my incapacitated mother. I am hiring caregivers to care for her in my home, and paying them with my mother's money. I want my mother to have the tax advantage of this medical expense.

Who is the employer, for tax purposes? i.e., whose EIN/Social Security do I use as the "employer"?

Home Care Paying for Care Taxes

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Thank you! Can you tell me what the deciding factor is? I.e., is it because it's her money?

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It is her money, and as her guardian you are acting on her behalf. Think of her as the company and yourself as her humble functionary, if you will.

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Thanks, Countrymouse. Humble functionary is a very good description. :-)

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I assume it would be your Mom's social security number if she is paying for the employees.

I remember when my Dad had caregivers, his CPA was able to claim the amount for his care at home. But I had gone through an Agency, so the Agency took care of the payroll, taxes, W-2 [1099's], etc. One can hire a "payroll service" to do this for you, but there would be a cost for Mom.

One thing to remember, if Mom hires self-employed [independent contractors] as caregivers, Mom would need to obtain a workman's comp policy through her homeowner's insurance carrier. The workman comp policy helps cover the caregiver should the caregiver gets hurt on the job.

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I wonder if needing to get a workman's comp policy is necessary if we use a local individual to do some light housekeeping every couple weeks?

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Agree. Your mother.

Im assuming your are looking at a employer type deduction.

However, a good accountant can find all sorts of deductions to claim and hopefully get enough “medical” expenses added up to qualify for this deduction. As the medical deduction is based from a percentage of income - it sometimes can be a tough one to achieve.

I did experience some frustration with my mother being considered the employer rather than myself. I handled all the money, bills, contact and communication with the home care agency - but as far as the caregiver was concerned - mom was the boss. I guess... technically so.

Still - when my mother had her big fall - The Game Changer - as I call it, all sorts of issues came to light. Things that I feel I should have been told so I could have made arrangements for a higher level of care.

Which, I suspose was my mothers fear as she instructed the caregiver not to tell me about several specific instances- things that screamed “more care”. But there I was - thinking that with the caregivers help, mom was “managing”.

Yeah, right.

Sorry for the aside rant - residual frustrations!

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You are in charge, You are the Guardian, Take everything down to the Tax people and get some advice.

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I am legal conservator and guardian of my incompetent mother. In my case, I would be the employer. If you do not have this legal designation, then your mother would be the employer. However, I would speak with an accountant.

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Your mom is the employer.

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If you have POA you are..however, I would see a tax specialist. They can do things to reduce the cost of taxes such as setting you up as a "corporation". Do NOT go this alone. It's complicated. Do it right and let a specialist handle it.

If you do not have POA and *especially* if you have siblings you need to see an eldercare attorney and Petition the Court to establish you as one if your mom is incapable of making her own decisions. Do this now. I guarantee you your brothers and sisters will be your worst enemies when the estate runs dry due to her care and you WILL be accused of extorting her money. Your own family will stab you in the back because they have no clue how expensive it is to care for a totally incapacitated person. All they care about is getting a piece of the money pie like vultures. IF you are POA they will have no say.

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Her money then she is paying. Make sure u pay by check, from an account that also has her name on it. Only use this account for her bills. Depending on the situation you might want the account to be set up as a trust. Or a account with both your names. Also make sure who will take over for you should u die. U need to talk to a banker. And a lawyer, cause laws vary state to state. Also both of u need wills.
MAT STRAZZ

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I would say your Mother is the employer. You are acting on her behalf.
But this is something that you should ask a tax preparer, CPA or if you have a lawyer that knows Elder Law they would be the ones that would know the "in's and out's" of the insane IRS system.

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Your mother.
Hopefully you are already POA. No cash, all checks for everything, or debit card (for excellent record-keeping).
I went to an elder lawyer for advice. We ended up setting up a trust (I was already POA).
Everything is very simple and straight-forward now, and I don't have to concern myself with probate later on.
Each state is different, check in with an elder attorney.

All the best to you and mom!!

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My sister who is POA got our father an EIN. He is the employer. She got a payroll company to pay the employees. She set up workers comp for them too. They are actual employees. Most of them want to be paid under the table, however we want everything to be legal.

I suggest the payroll company BeneftMall PayFocus. They are awesome. I have them do the paperwork for my small business. They bend over backwards to help.

The payroll company takes out taxes and files all the paperwork, which simplifies matters. Her payroll company was difficult to deal with.

Be careful be about over time if you have limited funds because it will eat up the savings.

Employees are more expensive than Independent Contractors, but it makes it all legal.

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Just to say that having someone be an independent contractor can also be very legal, but you still need the appropriate legal papers to back that up and would need something end of year to show what has been paid out. It becomes the contractor's problem to pay all taxes which is a huge hunk of what they've been paid which should be significantly more to cover that. The problem is people who are clueless will not set aside the funds to pay their taxes and wind up, if they file, not having the money to pay taxes...because they have spent the paychecks...I learned about this all the hard way many moons ago when a was newspaper carrier for the NY Times. Quite the shock and it took a repayment plan with the IRS to resolve it, even though it wasn't as huge an amount of money as one would have from a regular job. Taking note of the company you used, thanks!

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I'd guess it is your mother since that is how she would claim the deduction you want her to have, otherwise it would be you, and you are not paying the caregivers...it may be both a legal and CPA/IRS/tax preparer question. Perhaps a consult with a pro would save you grief in the long-run?

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If your mom has a Power of Attorney it may have specific language designating the power to hire to her Attorney-in-fact. If you are her appointee then you have that power. If the language is not uh her PIA then check her Medical Directive (a/k/a a Living Will).

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this Is how I will do it. Moms finance is different from care. Hope you have durable power of attorney in place to handle her finance and make decisions for her health care.
I will have a llc or s corp in place. Employe / contract people todo the services for mom through that company. Mom can’t control them. You as the employer will decide in consultation with mom the need for the services. It is a small price to pay to get organized but saves lot of HA.

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Yes the POA is important but the expense can only be deducted if you are itemizing. This will be reflected on your Mom's tax return as a medical expense on Schedule A. If you are hiring one yourself than your Mom SSN is used because she will get the deduction from her income not your income. If you are paying and hiring the caregiving then your SSN is used because it coming from your income. The POA only gives you the legal right to perform these duties like completing her tax returns, paying bills, etc.. But a Health Care Agent POA is different which allows you to make medical decisions for your Mom like who will perform the services and what she needs. I hope this helps. I had to perform all of these duties ,and when I read the POA, it did not give me the right to make healthcare decisions for my Mom. I did my research and got these documents through a lawyer on LegalZoom which really helped me to navigate legally what her care needed and the changes that comes with taking care of an elderly parent, so please seek legal advice from Legal Aides in your community which is free for seniors or Legal Zoom which is cost effective for what you need to do for your Mom.

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You are the décision-maker but your mother is the beneficiary of the services. Thèse are her expenses, not yours. Be sure to keep good records and do not comingle your funds with hers. I am not an attorney. To be confident of your actions, you should consult with an attorney. It will not cost much money and you will have greater peace of mind.

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She's paying, she's the employer. You're just acting on her behalf (as POA).

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Are the caregivers thru an agency? If so, you pay the agency and the caregiver is provided the 1099 from their "employer".
You are paying for services rendered at a scaled pricing just like you would a housekeeper or lawn service.

As the guardian, you just need to keep records of all monies paid out from your Mother's money to report every year to the Court. All monies spent with Mom's must only be used for Mom, you have to account for that ESPECIALLY if you have siblings as you will need to prove to them that you didn't use her money for a dream vacation.

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We used caregivers for my Mom who were not employed with an agency. They had their own employer I.D. # so we were their clients. I had two free lance that had to get a background check before I let them come there. It easier to be the client because if you become dissatisfied with their care, you can discontinue their services without them asking for severance pay which is what we had to do once. You both should have copies of days/hours worked for your records. You need to keep those in case your loved one ends up having to go to the nursing home. Mom did because she could not even sit up and all food puréed, etc. You may need those expenses if she ends up spending down to Medicaid in the future. We did not expect that but I always was a record keeper and lucked up that I saved all paperwork.

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Thanks, everyone, for all the very good advice. As further information, I did consult with our eldercare lawyer, and she says mom is indeed the employer. I'm already in meticulous record-keeping mode (I need to report to the court on all expenses because of the guardianship) and we're using timekeeping (timecamp.com) and payroll (quickbooks online payroll) software, so all the withholding, overtime rates, etc. are fairly easy to calculate.

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Your lawyer and insurance agent should be consulted as well as a tax person.

The following are clips found on Google.

"Caregiver expenses can be deductibleas medical expenses. That's where the confusion starts. ... And there's the medical expense deduction threshold. Medical expenses are deductible only to folks who itemize, and then only to the extent that the expenses exceed 7.5% of your adjusted gross income.
Dec 8, 2011

"The employer would not have to withhold taxes on the caregiver. However, the employer is required to file copies of the 1099-MISC with the Internal Revenue Service. ... If the caregiver is an independent contractor, the employer must file a Form 1099-MISC and be concerned with potential liability for a work-related injury."

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Thanks, Roscoe, but I don't think I can treat mom's caregivers as contractors unless they make less than ~$2100/year (not the case for our caregivers). I have it from several sources that because I am dictating what they do, we need to be an employer, file W-2s, etc. We are hopefully covered for work-related injuries via the workers' compensation addendum to our homeowner's policy.

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Okay~here's the catch. Your mother will be the income tax filer in this instance. However, bear in mind that she adds the caregiving expense ONLY IF SHE ITEMIZES her deductions & then she must meet 7.5% of AGI. HOWEVER, for the tax filing year 2018, the Standard Deduction is higher. That said, many filers may opt for the higher Standard Deduction.

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I am not paying for Moms care, Medicare/Medicaid is. However, I am the one calling the shots when it comes to the aides and their agency. Remember the agency works for you and the aides work for the agency but YOU are the one who is able to take control of your moms care. I went thru 40 aides before I finally found the angels I now have. With everyone of them, I did a meet and greet. With each other them I sat down with them over a cup of coffee when they first arrived at my moms home. I explained everything about Moms condition and moms care. I always do the first change of diaper to show how "I expect My Mom to be cleaned". Wipes and warm water, gentilly cleaning her, never use a wipe twice, if you get your glove soiled throw it out immediately, also when in doubt throw it out, etc. I believe I may be an acception to the rule. If the agency sent an aide that was not up to parr or sent a replacement aide without consulting with me first, I would dismiss the one that was not up to parr within the first hour and I would not allow entry to the one sent without my consent. After many months of initiations, I was known well throughout the agency and they new BETTER! Same goes for Moms visiting doctors, nurses, etc. You are the patients rep.or proxy you are the one that calls the shots. Just sayin.

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Are u talking about aides or health care pros? Aides can be paid by medicare or insurance advantage plans. This is since Jan. 1. None of the health care agencies in my area offer aide services, and most don't know of the new medicare benefit.

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Here is a link to the IRS:

https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee.

There are certain criteria to have someone who works for you as an Independent contractor. Our accountant advised us to have the people working for our Dad be employees.

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At the top of the page it says: "It is critical that business owners correctly determine whether the individuals providing services are employees or independent contractors. Generally, you must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. You do not generally have to withhold or pay any taxes on payments to independent contractors."

Keywords there for me are "business owners". Individuals who are in such bad share so as to need a caregiver are not running a business. The sick person is not running a business. There is no "company" that controls the behavior of the caregiver; it is an agreement between two people - one who needs care and the other whose willing to give it for money. Also, the relationship will not continue beyond the life of the person needing care or that person moving into a facility.

And it's not illegal rather that your accountant has advised your father to make his caregiver an employee. Others should know they can choose differently and not fear breaking the law.

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unfortunately, in order to be able to afford home health aide services , one must use the underground economy and hire people like home cleaning services.

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Well, simply exhausted, just when I thought that our legislators in Washington D.C. couldn't - wouldn't - make it more difficult for sick and/or frail people who need help at home to afford it, turns out I was wrong. Thanks for all the information.

And viva la underground economy!!!

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Who is the "employer" of Mom's caregivers? My mother or me?

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