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Whether or not a privately hired caregiver is considered a literal employee can vary by state. If this rule applies in her home state, then she is liable for withholding, reporting, W2s and anything else. In my state of MN a caregiver is never considered an independent contractor.

Your sister can consider hiring a bookkeeper to perform all those responsibilities.
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Reply to Geaton777
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I have no personal knowledge about this, but would advise you and your sister to contact a tax attorney to get the specific laws for your sister's situation in your sister's area. ASAP. Good luck.
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Reply to JanPeck123
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BurntCaregiver Nov 18, 2024
@JanPeck123

If you have no personal knowledge about this how can you advise on it?
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What exactly do you mean by a 'healthcare assistant'. Do you mean a homecare worker?

Every job is supposed to have taxes taken out. If your sister is privately paying a caregiver in cash (and many do) make sure she uses the envelope system and literallly pays them in cash. This way there's no paper trails and no trouble. This way also protects your sister if in the event her aide becomes a trouble-maker at some point.

Or, the 'healthcare assistant' can take out her own taxes like I did on private cases.
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Reply to BurntCaregiver
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Do your research the easy way on IRS site.
They will even be, if you type in "paying caregivers", very specific.
The other option is to speak with your CPA or research on their sites.
Remember, the internet is your friend, and to answer your questions, unless we have directly done what you are planning to do, we are for the most part clueless about the legal stuff. Unless, that is, we have done it ourselves.
Because laws vary so much state to state you will be researching your own state, as well.
Also check with any agency you hire as they will most certainly operate within the tax laws when paying their workers.
Just clicking this into the computer search I am met with tons of stuff. Care.com has apparently people you can hire to do tax forms. And there is this:

"When hiring a caregiver, you need to provide the following tax forms12345:
W-2: For nannies, senior caregivers, or other household employees.
Form I-9: For proper identification.
Form W-4: For state income tax withholding (if applicable).
Form 1099-MISC: For nonemployee compensation if payments exceed $600.
Form W-3: For transmittal of wage and tax statement".

Apparently if you pay UNDER some certain stated amount you don't have to give filing papers (and the caregiver is the one responsible to file their taxes) if you pay less than 600 over the year (or some such amount; my recollection is for years ago when I paid a man to check my brother's garden for a while when he went into care.

Good luck. It all gets terribly complicated, doesn't it?
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Reply to AlvaDeer
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Check the IRS website if you are in the US. It details the requirements for home care.

One of Mom's caregivers was working a second caregiving job. We paid legal and had taxes taken out. The second caregiving job paid cash. The caregiver was regular depositing the cash in an account and this was flagged by the IRS.

IRS made an investigation. The employer had to pay back taxes, interest and a penaltay of $5000 for not withholding taxes.
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Reply to brandee
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No, this is determined by federal law and the case law that has developed from it. It does not vary by state!
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Reply to Igloocar
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