Household employee or gift?

[Calvin]

Client lives with elderly parent and provides care, pays bills, transports to appointments, etc., and is paid a weekly amount. Client's only other income is his own social security. There is no formal contract or agreement for this arrangement. Client does not provide this type of service to anyone else, so I wouldn't consider him to be "in business". I'm thinking this would be a household employee situation, but with that the parent would also have to pay employment taxes. Any way this could be considered a gift since the annual amount would be less than $13,000 and there is no formal contract? How would you handle this situation?

[Gretel]

I surely would treat this as a gift, if Social Security credits are not desired. Another issue to look at is liability insurance.

[Dusty2004]

House hold employee

Client lives with elderly parent and provides care, pays bills, transports to appointments, etc., and is paid a weekly amount. Client's only other income is his own social security. There is no formal contract or agreement for this arrangement. Client does not provide this type of service to anyone else, so I wouldn't consider him to be "in business". I'm thinking this would be a household employee situation, but with that the parent would also have to pay employment taxes. Any way this could be considered a gift since the annual amount would be less than $13,000 and there is no formal contract? How would you handle this situation?

Sounds to me like they are receiving pay for work performed, not a gift for no reason.

Dusty

[taxmom34]

is this situation any different than a child living at home and paying room & board. does the parent have to claim that income?

[JG EA]

Yeah, I vote gift also. Of course remember the $13.000. As G pointed out are wages wanted for more Social Security increases? Interesting point to me - I can see a scenario where a parent would pay offspring on a W-2 creating EIC (sounds like this one is old enough not to happen) and it would be called manipulating the system.