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Tax Deductible Home Care for Mom and Dad in Massillon, Ohio

The first question usually is, “Where can we get help caring for mom or dad?” Caregiving is a tremendous responsibility and Tax Deductible Home Careextremely stressful so congratulations on realizing  a helping hand is something to be welcomed. Most people start with the mind rolodex skimming through friends, neighbors and distant relatives trying to decipher who is a good fit, willing and able. Most families find a couple of people willing to pick up some of the caregiving responsibility in exchange for cash. This seems perfect at first but what you don’t know right now could severely impact you and your loved one receiving care.

Let me explain further.

  1. Paying someone under the table is illegal. I know you are probably saying “So what? Do you want me to put my babysit on payroll too?”

A major issue is that when you hire a private in-home caregiver, the IRS considers that person your employee if you pay them more than $1,800 in a calendar year. Therefore you are responsible for withholding and paying taxes, including income tax, Social Security, Medicare, and other state and local taxes, etc. If you fail to do so, you are defrauding the government of money, and you are operating illegally. You could be caught by the IRS (this is more likely than you might think), and you will be responsible f or paying back taxes and penalties. Penalties can be steep if the discovery occurs after some time has passed.

The issue comes up if you ever have to put your loved one in a nursing care facility. The average cost of a private nursing home room is $7,698 a month (Genworth, 2016). People run out of money fast at this rate and Medicaid has a 5 year look back period. This means you will have to account for how the money has been spent, gifting, cash transactions, etc. Paying someone under the table is not acceptable spend down of funds.

  1. You are missing out on a tax deduction. When you hire a caregiver through an agency to assist you with bathing, dressing, eating, getting into and out of your bed, chair, etc. (called transferring), getting to and from the bathroom, or managing continence, the cost of those services is considered a tax deductible medical expense. Care for a person with memory loss, for their health and safety, is also a deductible medical expense as is transportation. These cost savings could equate to a 15% – 25% cost savings depending on your tax bracket.
  1. Verifying that the caregiver does not have a criminal history or even has a valid driver’s license is difficult. An agency conducts background checks and uses verification agencies to confirm their results, something that is hard to do on your own. Furthermore, professional caregivers are usually licensed and bonded by their agencies. You do not need to worry as much about theft (a high risk among private caregivers), nor are disability claims as much of an issue. You can be liable if a caregiver is hurt on the job, and have little recourse if your loved one is abused or neglected other than to dismiss the caregiver (often a difficult task). You will need to manage the care, and deal with the consequences if the caregiver does not show up or quits unexpectedly. Your loved one could be suddenly without care, and handling the care can be up to you.

If you need professional care for your loved one please call and let us help at Rather Be Home, LLC. 330-526-0483. Helping you live independently.