Hi,

My grandmother will be moving in with me at the end of this month. I will be leaving my full time job and her estate will be paying me to take care of her. I will be receiving a 1099 at the end of the year, and I have no idea what to expect in the way of what I am going to owe the government. Are there any other caregivers out there that are getting paid who would have some advice on this issue???

Talk to an accountant. You may owe way more taxes than you expect.

Without know how much she is paying you, no one here can give you an accurate estimate of the taxes you will owe.

H&R Block, or any tax expert.. ask them for help or a tax lawyer.. get help with this before the IRS comes knocking,,, trust me you dont want them on your case .. you will have enough to deal with taking care of Grand...every state is different in their laws..best of luck to you.
Zerotears

Take a deep breath. Do you know what your hourly pay will be? It must be above minimum wage.

Your Grandmother's estate or holding company or whatever, needs to hire an accountant to pay you through. The accountant will take out state, federal and local taxes and will also take out SSI for social security. If your family is not willing to do this, then walk away. Working'under the table' is not a good option for you unless you stand to inherit an estate of major $$$. Giving up SS is a very expensive loss in the long term.

Caregivers should not give up their right to a minimum wage and pension.

Thanks for the quick responses.

Someone has suggested that I set myself up as a business,( i.e. im in the grandma care business =) )so I can deduct most of the expenses that would be incurred by taking care of my grandmother (such as housing, travel, food, care supplies, medications, etc) and then "pay" myself with what is left over (which would be about a third of what I am getting paid, rather than paying on the full amount) My Uncle is the financial POA and payments would be coming directly from him. I was wondering if anyone else is in the same situation, and how they have dealt with the "money" issues...

thanks again!

If you are in business for yourself, then the payroll tax situation becomes a bit more complicated. See a CPA for details. I believe that self-employed people must pay both parts of Social Security taxes, not just the employee's portion.

quote:

Originally posted by tiempo:
Hi,

My grandmother will be moving in with me at the end of this month. I will be leaving my full time job and her estate will be paying me to take care of her. I will be receiving a 1099 at the end of the year, and I have no idea what to expect in the way of what I am going to owe the government. Are there any other caregivers out there that are getting paid who would have some advice on this issue???

I'm not a caregiver but I run my own business in another field.

If you receive a 1099 you are considered an independent contractor (basically you own your own business).

You don't have to create a business name or get a new bank account, although a separate bank account can help with record-keeping. If you don't, then the type of business you have is a "sole proprietorship" which just means you're in business for yourself.

There are three main tax consequences:

--You are responsible for paying both parts of your social security tax--the part the employer pays and the part that the employee pays.

--You also should estimate your income and pay estimated taxes quarterly, because you won't have an employer who is withholding taxes.

--When figuring your annual work-related income, you can deduct any expenses related to your work. These deductions are different from your personal deductions and they reduce both the social security tax you pay and your adjusted gross income.

A computer tax program like Turbotax for Business can walk you through all that. It's not hard (I think. Then again I'm used to it). Or you can see an accountant or a tax preparer.

Suggestion before we all think we're experts, get with a good, qualified CPA. My husband and I are both 1099's (20 yrs) and without our CPA we'd have been in deep trouble years ago. They can guide you as to how to pay taxes and what you can write off your taxes. Also a CPA will know how much you can take for hourly rate as caregiver to a LO -- as IRS has many rules and stipulations we have no clue about. Don't just "assume" as who'd want to contend with an audit by IRS???

You might try calling the ALZ hotline and see if they have list of good CPA's in your area or another option, Elder Care attorney.

Best to you and welcome to our boards!! Look forward to seeing you back here soon....

Thank you all so much! I will find a CPA to get started and definitely invest in turbo tax or quicken.

Once again, thank you for the quick and warm welcome to the board!

There are also payroll companies that can write you a payroll check for a fee (usually per check) and they will get all the tax paperwork done so someone can send in your taxes. All they do is payroll for companies. There are large companyies like ADP or PayChex, as well as small companies. You could probably find a small company through your local Chamber of Commerce.

You have enough to do to be a caregiver. Don't take a chance that Uncle Joe is on top of it if he has never done payroll and accounting before.

It seems like the LESS you make -- the more important it is to have them pay the taxes for you. Or else you could find yourself working for a couple dollars an hour.

Learning, it's true there are companies that handle payroll for businesses -- my business used PayChex. I'm wondering whether that might not be the best way to go, though. They would handle the entire amount on the 1099 as payroll, whereas it sounds as if a lot of it should be handled as reimbursement for other expenses. (Some of this is what Stef was talking about under her last bullet, but some might be better handled a different way -- grandmother's contributions toward housing/insurance/utilities etc etc.)

It might be less expensive and less of a hassle to let a good CPA handle things, or at least set up the basic approach for tiempo and discuss the issues with her. For example, if the entire amount of the 1099 is used as the basis for SS etc, tiempo might be able to recover excess Federal and state income taxes that are withheld, but might have trouble recovering some of the other excess taxes that are withheld.

And jazzy makes a good point -- having a CPA handling these matters makes it much less likely that tiempo will be audited, and will give her someone to help her deal with the IRS if she ever is audited. That's worth a whole lot, right there, in my book!

This is a really complicated topic. By "estate",
that usually means the entity thats formed after ones death. The IRS is great at answering questions. You can email them, call them, don't have to give them ID and they'll answer all your questions.

I'm betting they are paying her a standard wage...nothing over the top. In fact, it may actually be LESS than minimum wage if you figure in all of the hours of work.

Unless the caregiver is independtly wealthy, she probably needs to think about her own future, retirement, health care (now) medicare later.

I'm suggesting a company be used for issuing a regular old paycheck each week, monthly, whatever and let them know what monies need to be paid to the state and the IRS and when.

I've talked to people who's loved ones have been in NHs for 10 years or more. That could eat up a lot of money in anyone's "estate," leaving nothing for the caregiver who worked for a low wage.

What works today may not work tomorrow, ie this caregiver may not be able to do the job in the future...and there goes the money that she saved the family.

[QUOTE]Originally posted by tiempo:
I dont think we really need a payroll company to handle the checks.. there is one monthly lump sum deposited into my account. I dont mind doing my own taxes, medicare and ss witholding, and will be using a software program to deal with those issues. However, I do not want to be paying on monies that are used for the "business", and I hate to use that word, of taking care of my grandma... I definitely will be setting up an appointment with a CPA sometime this week, and thank you for the suggestion about mailing the IRS, I never even thought about that! I will be getting paid what the family would be paying to have her stay in an "moderate" Alzheimer's Facility, which is much more than they are paying for assisted living right now.. She is not in need of 24 hour care, just supervision and more personalized care and one on one attention . I am not looking at this as a LONG TERM CARE situation , ie, more than 5 years, at this point in time. it is more of a "happiness and comfort" issue.

In the end, if you're happy, we're happy.

ttt

The IRS has the last say in whether or not you're really in the grandma care business or actually an employee. A CPA can help you know whether or not your idea would survive an audit. I'm skeptical, but it's worth asking about. Just don't do it without expert advice.

quote:

Originally posted by tiempo:
Thanks for the quick responses.

Someone has suggested that I set myself up as a business,( i.e. im in the grandma care business =) )so I can deduct most of the expenses that would be incurred by taking care of my grandmother (such as housing, travel, food, care supplies, medications, etc) and then "pay" myself with what is left over (which would be about a third of what I am getting paid, rather than paying on the full amount) My Uncle is the financial POA and payments would be coming directly from him. I was wondering if anyone else is in the same situation, and how they have dealt with the "money" issues...

thanks again!