How the COVID-19 virus has emphasized legal pay for caregivers

Unemployment benefits available to caregivers paid legally

Updated

During these unprecedented times, families are continuously adapting to make sure their care needs are met and that their caregivers are taken care of. You’re probably aware that the federal government passed the Families First Act and the CARES act to try and help employers and their employees deal with challenges presented by the COVID-19 virus.


“This new legislation helps both employers and employees access benefits like paid sick time, paid family leave, tax credits and additional unemployment benefits,” says Tom Breedlove, Sr. Director of Care.com HomePay. “However, these benefits highlight the importance of paying caregivers legally because if families are paying under the table, neither they nor their employee will have access to them.”

 

Let our experts guide you through the benefits of paying legally

Below are more details about the benefits families and caregivers can receive from either the Families First Act or the CARES act:

 

  1. Tax breaks for paid sick leave and paid family leave

Household employers paying legally may be eligible for reimbursable tax credits if they have to pay their employee while they’re out of work.

  • Up to $5,110 in tax credits for paid sick leave if their caregiver is sick, or up to $2,000 if they need to take care of a family member.
  • Up to $10,000 in tax credits for paid family leave if their caregiver cannot work because their child’s school or daycare is closed due to the COVID-19 virus. 

For more information, see our breakdown of the Families First Act for details on the tax credit.

 

  1. Expanded unemployment insurance benefits

If you have to let your caregiver go due to no fault of their own — such as your needs changing because of the COVID-19 virus — they will most likely qualify to receive unemployment benefits from the state while they are out of work. Under the CARES act, benefits have been expanded by an additional 13 weeks, and eligible employees can receive $600 extra in unemployment benefits for up to 4 months.

 

If you’re paying under the table, the state will not award benefits to your caregiver because they will have no record of you contributing tax payments to the unemployment insurance pool.

 

  1. Stimulus checks

The CARES act may award your caregiver with a one-time payment of up to $1,200, plus an additional $500 for each child they have. The catch is that they must have a Social Security Number and have filed a 2018 or 2019 tax return to receive this payment. If your caregiver was paid under the table and never received a W-2, they may not have filed a tax return and would not be eligible for this financial benefit.

 

How HomePay can help get your caregiver on the books

We regularly work with families that have just learned of their tax and payroll responsibilities and want to get their caregiver on the books. We can quickly and efficiently file all the household employment tax returns you have missed and work with the state and the IRS to manage any notices you may receive. From there, we’ll continue to manage all the tax, payroll and compliance aspects of household employment on your behalf so you don’t have to worry about mistakes or filing errors. At the same time, your nanny or caregiver will receive the protections they deserve.

 

First things first—have you hired a caregiver?

If you're seeking a caregiver or a care job, visit Care.com

What type of caregiver have you hired?

Have you already made any payments to your caregiver?

Yes
No

If you've made payments, we'll help you track them and we'll provide your employee with pay stubs.

We'll help calculate the taxes in your state.

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What type of caregiver are you planning to hire?

When do you expect to hire someone?

How many hours do you estimate your caregiver will work?

0 - 15 hours / week
15 - 40 hours / week
40+ hours / week
24 / 7

We'll help calculate the taxes in your state.

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