Yes, you can pay your Dad for those services. Yes, he has to report the income on his tax return. You do not have to withhold payroll taxes (Medicare, Social Security) or issue a W-2 unless both of the following conditions apply:
- The child is under the age of 18, or has a physical or mental condition that requires the personal care of an adult for at least 4 continuous weeks in the calendar quarter services were performed.
- Your marital status is one of the following:
- You're divorced and have not remarried.
- You're a widow or widower.
- You're living with a spouse whose physical or mental condition prevents them from caring for child for at least 4 continuous weeks in the calendar quarter services were performed.
Although wages paid to a child, spouse, or parent may be excluded from social security, Medicare, and FUTA taxes as described above, those wages are still subject to federal income tax.
You don't have to issue a 1099, since your father is not providing services in the course of your business. Only businesses issue a 1099-NEC; individuals do not.
You're not required to withhold federal income tax from your father's pay, but you may do so if you choose. If you do, you must issue a W-2.
You'll find the full details on all these rules in this IRS Publication:
https://www.irs.gov/pub/irs-pdf/p926.pdf
**Answers are correct to the best of my ability but do not constitute tax or legal advice.
