Most of the time, “underground” payments (often in cash) are made to individual domestic workers such as housekeepers under the wrongful assumption that they independent contractors. According to the IRS, these workers should be paid as household employees, even if they are part-time or if they live with you. This opinion has been held up in the courts.
IRS Focus
Household payroll is an area of interest for the IRS. New legislation, including domestic workers bill of rights at the state level, changes in minimum wage and overtime requirements that will be in affect as of 2015, and the Affordable Heath Care Act requirements for workers to document their wages before they can qualify for a subsidy, are all targeted at bringing household payroll taxes “above ground.” Workers may start coming to you and formally ask you to get them documented on your books.
Demand for Services
The silver tsunami – or the aging of the nearly 80 million Baby Boomers in the US – is driving new hires for household workers. The generation’s need for help with health care and other services will stretch our current system.
Seek Professional Guidance
Manage your risk effectively if your family makes the decision to hire household workers. Learning about the issues yourself is important in order to understand your legal obligations. Seeking expert advice is highly recommended so that you can protect your personal wealth as well as your peace of mind. If we can help, please reach out and let us know.
PS – If you know a caregiver and they need additional resources to help manage communications with family, healthcare providers, and other caregivers check out Marie Gibson’s book, The Caregiver’s Journal.
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