Medical Caregivers Working in Your Home

If a loved one needs medical assistance within your home and you want to take the expense as a medical deduction, who you pay and what you are paying for makes a difference. The person receiving care must require that care because they are chronically ill, need long-term care, or require substantial supervision because of cognitive impairment, as determined by a physician.

If you are paying a Home Healthcare agency that employs the worker then the amount you will claim for your medical deduction is probably what you paid the agency for the year. If you had a worker, and the right to control the details of the work that was done by your worker, then your worker is your Household Employee and you must issue them a W-2 at the end of the year. If you pay each worker wages of $2,000 or more, then you are required to withhold and remit Social Security and Medicare taxes. You may also be responsible for other taxes.

The matter of Household Employees and payroll filing is complicated. The average individual probably doesn’t even know what an EIN number is (Employer Identification Number which is required), let alone which payroll forms to file. It is highly recommended that you consult with your licensed tax professional instead of trying this on your own and risking an IRS penalty and back taxes in addition to your family’s medical costs.

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