Hiring a Private Caregiver

Hiring a caregiver privately versus going through an agency can be cheaper, but unfortunately, it's not always the easiest option.‍

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Did you know?

‍According to the IRS, if you pay a caregiver $2,700 or more for the 2024 tax year or more than $1,000 in a calendar quarter, you're responsible for withholding and paying taxes as a household employer. 😬

"You have a household employee if you hired someone to do household work and that worker is your employee. The worker is your employee if you can control not only what work is done, but how it is done. If the worker is your employee, it doesn't matter whether the work is full time or part time or that you hired the worker through an agency or from a list provided by an agency or association. It also doesn't matter whether you pay the worker on an hourly, daily, or weekly basis, or by the job." – Publication 926 (2024), Household Employer's Tax Guide

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Therefore, It's important to do your research to make sure you have a good understanding of your responsibilities when you hire care.

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If you go directly through an agency, the caregiver is most often considered an employee of the agency. That puts the responsibility of IRS forms and payroll taxes on the agency.

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If you are considered a household employer you will be responsible for:

• obtaining an EIN
• determining if an individual is legally able to work in the US
• withholding social security and Medicare taxes
• record-keeping including providing your employee with the appropriate forms
• making tax payments

*As if caregivers don't have enough to worry about! 🙄

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The good news is that you are not required to go through the household employment tax and payroll process if care is provided by your spouse, your child under the age of 21, or a parent.

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Resources to help you navigate this process:

Household Employer's Tax Guide‍

Tax Implications of Hiring a Private Caregiver

Household Employment Tax Requirements by State‍

Tax and Payroll Management Services for Families Who Hire Private Caregivers

Family Caregivers and Self-Employment Tax
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*We cannot give legal advice! Be sure to consult a professional such as a CPA or attorney for more specifics and to make sure you are doing things the "right" way!