Is it legal to 1099 a caregiver when they are following a set schedule in the employers home?

[monakelosman]

I would be working 15 hours per week and making more than $2000 per year.

[bwa · Accepted solution]

If you're providing services in the employer's home and not in this business for others, they should be treating you as an employee.  However, sometimes the easiest way out is to file it as self-employment income as if you received a Form 1099-MISC with the amount in Block 7.

[monakelosman]

My question is ...is it legal for them to 1099? I would be their employee, according to all the documentation I have read from the IRS. They would set the schedule and enforce the rules and requirements while I would be working in their home spending 100% of the time assisting a 90 year old.

[bwa]

In the sense that they should be providing you with a W-2 it could be considered not legal.  However, the difference to you is probably not material, and the IRS isn't going to get excited about one Form W-2.  

Form 8919 is used to report wage income that was incorrectly reported on Form 1099 or not reported. It will require you to pay FICA and Medicare taxes on the payments (remember - you would have paid them anyway) but not the matching employer share. (Sometimes, the easiest solution is to just report it as self-employment income and pay self-employment tax on it. Even if reported as wages, you would still also have to pay the employee’s portion of social security and Medicare.)

If you choose to report as wages, and if this is a bonus, car allowance or other amounts paid to you on Form 1099 and you already receive a Form W-2 from your company, you should use Reason Code H. Reason Code H is "I received a Form W-2 and a Form 1099-MISC from this firm for 2012. The amount on Form 1099-MISC should have been included as wages on Form W-2."  If you use Reason Code H, a Form SS- is not required.
Form 8919's  "Who Must File" instructions include:
You must file Form 8919 if all of the following apply.
• You performed services for a firm.
• The firm did not withhold your share of social security and Medicare taxes from your pay.
• You believe your pay from the firm was not for services as an independent contractor.
• One of the reasons listed below under Reason codes applies to you.

Reason Code H is "I received a Form W-2 and a Form 1099-MISC from this firm for 2015. The amount on Form 1099-MISC should have been included as wages on Form W-2"

[monakelosman]

This is so helpful, thank you.  So one more question.....I work full time as a nanny, get a W2 and pay taxes through payroll deductions. If I have a side job on the weekends with a senior for approximately 35 hours per MONTH, and they pay me cash without a W2.....what are the consequences of not reporting it on my tax return?

[bwa]

The consequence is you would be committing tax fraud, a felony.  You don't want to go there.