Ask Mike - Need tax and payroll advice for a caregiver
Dear Mike,
My mother requires daily assistance now that my father has passed away. My sister, who lives with my mother, has quit her job to provide this assistance and my mother would like to pay my sister something (approx. $200 per week) so that she can continue to cover some of her own expenses. Does my mother have to treat this arrangement like a household employee situation for income tax and payroll tax purposes? Thanks for any clarification you can provide.
Taxes for PAS
Dear Taxes for PAS
Thanks for writing. Your sister has quit her job to provide the assistance your mother needs to stay in her own home. Your mother would like to pay her $200.00 per week for this assistance, but needs to know the tax and payroll withholdings implications of doing so.
First of all, it is highly recommended that you get advice from an accountant or attorney with expertise in this area. The PAS Center website has information that should be of assistance to you as well. Go to www.pascenter.org. The homepage has a menu on the top, with a selection entitled "Economics and Workplace". Click on it. Choose "Tax Issues" on the following screen. There are a few resources there that may be of help. I think in your case, you may want to particularly look at "Frequently Asked Questions: Tax Coverage of Expenses for PAS". The resulting screen has information and ideas to share with your CPA or tax attorney.
Good luck.
Mike Oxford