Are home health care workers considered employees?

[PAC6]

My mother, suffering from dementia, is now paying for 24x7 home health care, provided by 4 different caregivers.  All are independent contractors, not working for an agency, and we make payments to their personal accounts weekly.   If we want to deduct the expense of paying for these home health workers on my mother's federal taxes, do I need to treat them as employees and contribute to medicare,  social security, and FUTA?  IRS Publication 926 isn't entirely clear on this:  "If you have a household employee, you may need to withhold and pay social security and Medicare taxes, pay FUTA tax, or both." (Italics are mine.)

[BrittanyS]

Most caregivers are considered employees has they typically do not meet the criteria to be classified as a contractor.  Per the IRS, "The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done.  You are not an independent contractor if you perform services that can be controlled by an employer (what will be done and how it will be done). This applies even if you are given freedom of action. What matters is that the employer has the legal right to control the details of how the services are performed."

If the caregiver meets the requirements of an employee, then the family or the agency would be responsible for employment taxes, record keeping and required insurance matters.

For more information, see the link below:

Contractors

@PAC6 

[PAC6]

thanks for the quick reply

[Opus 17]

They are probably household employees rather than independent contractors, based on your description, but it depends on who has control in the relationship (who sets the hours, working conditions, and other rules).

See here,

https://www.irs.gov/businesses/small-businesses-self-employed/hiring-household-employees

https://www.irs.gov/publications/p926

https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-o...

Separately, medical expenses your mother pays for her own care are deductible on her tax return regardless of whether the caregivers are employees or contractors.  However, assisted living expenses are not deductible medical care unless certain rules are followed.

Generally, only nursing services are deductible medical expenses. Nursing services don't have to be provided by a nurse, but they have to be the kind of services that nurses perform (like dispensing medication, assistance with dressing, eating, toileting, and so on).  Assistance with meal preparation, laundry, cleaning, and general companionship is not deductible, and you will have to determine the percentage of cost that can be allocated to nursing services.

However, you/she can deduct the entire cost if you meet three tests:

• the patient is permanently disabled, or has a cognitive impairment and would be a danger to themselves or others if left alone (as certified by a doctor)
• the patient requires assistance with two or more activities of daily living (ADLs are eating, dressing, bathing, toileting, transferring, and managing continence)
• the care is provided according to a written care plan that was prepared by an appropriate professional and reviewed and updated at least once a year.

Even if the patient meets the first two tests, only nursing services are deductible unless you get that written care plan.  There are social service agencies that may be able to help you find someone to write a care plan for your mother if her doctor is unable to do that.