Household Employee Issue

[FrebergCPA]

Elderly client who is now a non-filer. Social security benefits are now her only income so no tax return filing requirement. Her resources are dwindling down.
In need of some light household assistance, a friend is going to come in and help her 5 to 10 hours per week. They have agreed upon an hourly rate.
The total will likely get her to or even slightly over the FICA/Medicare annual limit as well as the FUTA limit. The friend does not provide home assistance as a business.

To avoid all the payroll tax issues, could we consider this as a gift? Any other thoughts here? Thanks.

[TaxGuyBill]

They have agreed upon an hourly rate.

That is not a gift.

If the worker is a Household Employee, it needs to be treated that way. Schedule H is easy, but sometimes state requirements and Worker's Compensation makes it more problematic.

In some cases they may be able to shift the circumstances so the worker would be a contractor, if that is what they want (although they would likely need to adjust their original agreement). Social Security and Medicare tax would still be owed as a contractor, but it could avoid FUTA, SUTA, Worker's Compensation and any other state requirements.

[terryats]

I believe the easiest way is for the worker to provide all cleaning equipment, and be an independent contractor, and client will file worker a 1099 NEC 2026 threshold is $2000. Will probably need to review their original agreement