Whether you’re an in-home caregiver, health aide or companion, when it comes to senior caregiving, taxes are generally part of the deal. And if you’re hired directly, in most cases, the IRS considers you a household employee. <\/p>
“That means your employer handles payroll taxes and withholds Social Security and Medicare taxes — and you need to pay your share too,” explains Paul Miller<\/a>, managing partner and CPA at Miller & Co. in New York City. “If you’re truly an independent contractor, you’ll handle your own taxes. But the IRS really looks closely at classification — so everyone needs to be very careful.”<\/p> Aren’t completely clear on what your tax obligations are as a senior caregiver<\/a>? Here’s what to know, according to experts.<\/p> Payroll taxes are taxes<\/a> paid on the salaries of employees. The main ones you’ll pay are taxes toward retirement (Social Security) and health coverage (Medicare), according to Xavier Epps<\/a>, a finance expert and owner and operator of FinanceGuysX in Washington D.C. <\/p> “On top of that, employers are often responsible for federal and state unemployment taxes, depending on the state,” he continues. “Each plays a different role in funding essential programs, so understanding them is key.” (In some locations, Epps notes, employees may be required to handle state and federal taxes.)<\/p>Key takeaways<\/h3>
What are payroll taxes?<\/h2>