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They are still a household employee no matter where the money you pay them comes from ... a LTC policy has nothing to do with the nature of the payment to the caregiver.
Similar question. My LTC pays for me for a caregiver (deposit to my checking acct) I then pay her (She is not a business. Just a helper) My LTC gives me a 1099-LTC but does not give her anything. How to get that info to her? Do I generate a 1099? Is there 1099 for that purpose in Turbo tax?
Read this Turbo Tax link to see if you have a filing requirement. If not, instruct your employee that she has a responsibility of reporting her income earned while being your caregiver.
Meanwhile please review this IRS link, to get an idea on what your responsibility is in reporting this type of income. For an example, if you paid more than $1700 to your caregiver. You are responsible for withholding FICA taxes and issuing her a W2. You can also issue a 1099 MISC. The problem with doing that this year is that the deadline was Jan 31 for issuing 1099's or W2's. issuing after that date will result in a penalty assessed by the IRS. I am not sure what that penalty is but it increases as time goes on. Here is a IRS link that talks about household employees, which is what your caregiver is.
Also, Turbo Tax does give you the ability to issue W2's or 1099's but you would need to be in Turbo Tax Self-Employed to access these forms. Instead i suggest downloading a pdf version of W2 or 1099 MISC. Here is a link for the W2 and here is a link for the 1099 MISC. Download and print these and fill these out. Note these are the for the 2020 versions of the forms to prepare for year 2020.
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