Household Employee(from Employee Standpoint)

[sdtaxman]

Client went to take care of elderly aunt for 8 months after which the aunt passed away. Client was paid 3,000 a month for her services. Aunt's accountant told my client to pay in estimates to irs to cover her liabilty. i spoke with aunts accountant and he is NOT considering her a household employee and he is not sending a w-2 or 1099. My client does not want to do the form 4852. Would you consider her self-employed or other income?

[RitaB]

I would say self-employed

I would say self-employed. After all, if the "employer" had issued a W-2, SS and MC would have been deducted, and I don't think the worker would be trying to get it refunded.

But, there are many that would disagree with me, and they have good arguments. Since there is no 1099-Misc with $24,000 in box 7, I think you'll be able to study and choose. I would choose Sch C.

[taxcraft]

Earned Income

This client was paid for services rendered....earned income. For me, the "Other Income" category is for items of unearned income like "winning the lottery". She should have gotten a W-2 or 1099, but, now we have to deal with what we have, and the Schedule C is the best choice. This will enable her to contribute towards her social security for retirement.

[Burke]

I suppose the accountant, however, IS planning to deduct these amounts as medical expenses? He better think twice about not issuing that 1099. The executor is the responsible party here and should ensure that it is done.

[ChEAr$]

I suppose the accountant, however, IS planning to deduct these amounts as medical expenses? He better think twice about not issuing that 1099. The executor is the responsible party here and should ensure that it is done.

As a household EMPLOYEE (!) a W2 should be issued and taxes reported on schedule H for the EMPLOYER. This is not an independent contractor stituation.

If she were my client, I would use the form 4562, an SS8, and that new fangled form
to pay her share only of FICA.

[taxea]

Families frequently pay a relative for care of the elderly or disabled via contract, written or oral. If TP is in complete control of how the care is given then I say it is a Sch C and there should be expenses to offset the income. If it was not a "business" paying her then 1099 is not required.

[Burke]

As a household EMPLOYEE (!) a W2 should be issued and taxes reported on schedule H for the EMPLOYER. This is not an independent contractor stituation.

If she were my client, I would use the form 4562, an SS8, and that new fangled form
to pay her share only of FICA.

You are right of course, and it should be a W2. Whoever does final tax return can report on Sch H. But I don't think you meant 4562? Either way, its no question its earned income.

[S T]

Household Employee

Should be W-2 and the appropriate payroll taxes both State and Federal.

Federal reported on Schedule H with tax return of payor receiving the medical healthcare benefits. States are usually quarterly reporting on payroll forms.

I believe the only time it would be a 1099 would be if the person hired as the caregiver, actually had some sort of a license in the health care profession and was operating a business, such as a LVN or RN, or other State licensing. Most caregivers do not have a "license"

Sandy

[Jesse]

Client went to take care of elderly aunt for 8 months after which the aunt passed away. Client was paid 3,000 a month for her services. Aunt's accountant told my client to pay in estimates to irs to cover her liabilty. i spoke with aunts accountant and he is NOT considering her a household employee and he is not sending a w-2 or 1099. My client does not want to do the form 4852. Would you consider her self-employed or other income?

I tried to find a similar situation where the Grandparents took care of the grandchildren and were compensated by the parents. The court ruled they were not in the business of childcare as they took care of only their grandchildren, was not a profit motive as it was more or less to help the parents out even though the were compensated.

Maybe someone else will recall the court case. If facts and circumstances can show this could be similar. If your client went to care for her Aunt as a matter of convenience and does not or has not taken care of others could be line 21 other income. I'll keep looking for the other case and will post if I can find it.

[ChEAr$]

You are right of course, and it should be a W2. Whoever does final tax return can report on Sch H. But I don't think you meant 4562? Either way, its no question its earned income.

4852? I never can remember the number of that form! (grin