During COVID, for safety reasons my parents no longer used an outside care provider for home health care. Their LTC company had been paying the care provider directly, with no taxable impact for my married jointly filing parents. Now that my mom is the provider and the LTC is paying my dad a "reimbursement" for hiring my mom, I assume that my mom will report this as wage income, including having to pay social security and medicare tax. Does my dad need to issue a W2 or 1099 to my mom? Is it OK to just report this as income on the tax return without going to the effort of issuing a W2 or a 1099? I assume this "reimbursement" is taxable as they are essentially paying themselves. They are quite elderly and are hoping for a simple solution.
