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Understanding Self-Employment Tax for Family Caregivers

Family caregivers provide in-home care services to aging spouses, parents, grandparents and relatives, either in their own home or the home of their loved one. While families often have their own reasons for providing care in the comfort of home, it’s important that they also understand some of the legalities associated with being a family caregiver. With tax season upon us, Home Care Assistance of Santa Clarita wanted to share some information about self-employment tax and the family caregiver.

Tax Obligations for Family Caregivers

When you provide hourly or 24 hour care in Santa Clarita, exclusively to an elderly or sick relative at home, you are not required to pay self-employment tax. Tax exemptions apply if the caregiver does not offer their services to the care recipient on a payment basis. On the other hand, if a family caregiver runs a business that offers at-home services, he or she must submit self-employment tax for the business.

Employer-Employee Relationship

Tax obligations for family caregivers are influenced by the employer-employee relationship between the caregiver and the recipient or the recipient’s dependant. In a case where a relative is hired to offer caregiver services to their senior family member, the latter qualifies as an employer. Here, the employer is not required to submit self-employment tax, and the caregiver is only required to file income returns.

Supplementing Care with Private Hire Caregivers

When a family caregiver supplements the care they provide with assistance from a private hire caregiver, a caregiver who was not hired through a Santa Clarita home care agency, the family caregiver becomes an employer, and is required to withhold taxes from each payment for services rendered. As an employer, it is also required to verify the private hire caregiver’s legal right to work in the United States through Form 1-9.

To avoid the lengthy and oftentimes complicated process of filling out tax forms for caregivers, work with local home care agencies when looking for respite care. Home Care Assistance of Santa Clarita is a trusted provider of in-home care, offering flexible care schedules anywhere from four to twenty four hours a day. We take care of all caregiver taxes and all of our highly trained caregivers are bonded, licensed and insured for your protection.

Request more information or a complimentary, no-obligation consultation with an experienced Care Manager today by calling 303-987-5992.