Caregivers and credentials
W-2 employee versus 1099 contractor
A W-2 employee works under the employer's direction and has taxes withheld by the employer. A 1099 contractor runs their own business and pays their own taxes. The IRS looks at behavioral control, financial control, and the type of relationship, not a label, to decide which one a worker is.
Why it matters for your family
The difference matters when a family hires a caregiver directly. The IRS says no single factor decides it. It looks at who controls how the work is done, who controls the business side such as pay and tools, and the nature of the relationship. A family that sets the schedule and directs the tasks may be an employer, even if it calls the person a contractor. A wrong label can lead to back taxes and penalties. Ask a tax professional before hiring. An agency that employs the caregiver may handle these duties. The IRS offers Form SS-8 to settle unclear cases.
Source: irs.gov
Read more: How to Get Started with Hiring In-Home Care
Related terms
- Household employer and nanny taxA household employer is a person who pays someone to work in or around their home and controls how the work is done.
- Workers' compensation for caregiversWorkers' compensation is insurance that pays medical costs and part of lost wages when an employee is hurt at work or gets a work-related illness.
- Private duty caregiverA private duty caregiver is a non-medical caregiver paid directly by the family or through an agency to provide one-on-one help at home.
- Home care agencyA home care agency is a company that employs or contracts caregivers and sends them to clients' homes.
- Caregiver registryA caregiver registry is a service that lists caregivers and matches them with families.
- Direct care workerA direct care worker is a paid worker who gives hands-on help to people who need support with daily living.
