Many families today are turning to private in-home caregivers for their aging parents instead of placing them in long-term care facilities. Private in-home care allows seniors to age in place with dignity and independence within the comfort of their own home.
The two available paid caregiver options are hiring an independent contractor directly or going through a home care agency. It’s a difficult decision for the family to make, and there are pros and cons involved with each. When your aging parent’s care weighs in the balance, should you hire an independent caregiver directly or go through a home care agency? To assist your efforts, what follows are some must-know questions and answers about hiring the best private caregiver for your loved one as you move the process forward.
When your aging parent’s care weighs in the balance, should you hire an independent caregiver directly or go through a home care agency?
Does it matter whether I hire a caregiver that is an independent contractor or privately-hired employee?
Yes, there are several important differences. If you are looking to hire an independent contractor (IC), you will need to follow these steps:
- Search for a reliable IC caregiver in your area
- Conduct criminal and driving background checks
- Hold a screening interview
- Check their references
- Confirm they are “legal” to work in the U.S. and have a valid Social Security number
- File all required Federal tax documentation (More on that later)
- Provide liability insurance and Workers’ Compensation if the IC doesn’t carry those
Regarding insurance, if the IC doesn’t have coverage and they are injured on-the-job, you may be responsible for their medical bills and lost wages. Licensed home care agencies provide all of the above when hiring their workers, including insurance. As a result, an agency-supplied caregiver will cost you more than an IC. When going either route, it’s wise to meet in your parent’s home with their potential caregiver to ensure that everyone’s personalities mesh. Directly hiring an IC caregiver gives you more control over who will be providing care for your loved one over an agency. Bear in mind that when using an agency you are limited to the caregivers that they employ and range of support services they offer.
When is the caregiver considered an independent contractor?
An independent contractor (IC) directly provides their services to others as specified in a written contract or verbal agreement. Think of them as freelancers who don’t work regularly for the same company, but act as caregivers when they’re hired on an individual basis. ICs may or may not be incorporated, but they are obligated to pay quarterly estimated Federal and state taxes. Whenever you pay an independent contractor over $600 for their services in a given year, you must supply the Internal Revenue Service (IRS) with a Form 1099-MISC showing their earnings, and provide a copy to the IC. When you hire an IC you are also required to withhold certain taxes, which we will examine in more detail next.
What tax laws do I need to know if hiring an in-home caregiver?
When you directly hire an independent contractor, there are several tax laws that must be followed. For 2018, the IRS considers that IC as your “employee” if you pay them wages for their services totaling over $2100 in a year. As an employer who’s managing those services within your parent’s home, you are responsible for handling these tax obligations:
- Confirming their legal status and Social Security number to work in the U.S.
- Reporting wages earned over $600 to the IRS and to the employee on a Form 1099-MISC
- Withholding payroll Social Security and Medicare taxes
Failing to abide by these tax requirements can leave you and your family open to IRS penalties. Never attempt to pay an IC “under the table”, as that is illegal. Licensed home care agencies understand the various tax laws and will manage those staff issues so that you can focus on what’s most important- the care of your aging loved one.
Hiring a Caregiver: Should You Employ One Yourself or Go Through an Agency?
In addition to initially finding, screening and hiring an independent contractor for your mom or dad’s care, you’ll be responsible for filing tax forms, payroll withholding and possibly even insurance coverage. And, if they are ill and miss a day of work you will have to find someone to fill in. As a licensed home care agency, First in Care handles all the groundwork for you ahead of time, including the background checks, tax form filing, insurance, and payroll withholding taxes.
In addition, we’ll communicate constantly with you and your family members regarding your loved one’s care, and when needed will promptly provide a reliable replacement. Our seamless caregiving approach is designed to give you peace-of-mind by delivering the compassionate at-home care your aging parent deserves.
To learn more about the advantages of hiring a caregiver through First in Care, or to access our flexible, affordable and family-trusted senior home care services, request a consultation now.
