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GeorgeZ1: As the answer to your query is not typically a simple one, perhaps you should ask a certified public accountant. You may also want to retain an elder law attorney.
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Generating a 1099 M will allow you to qualify for SS credits. Lots of rules.....
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I am a paid caregiver ((one of 6) for my adult son who has a severe brain injury but qualities for this program in Maine.

State of Maine Home and Community Benefits for Elderly and Adults with Disabilities
 
Participant-Directed Option is a choice offered to members to manage their Attendant Services. Specifically, the member hires, discharges, trains, schedules and supervises the Attendant(s) providing services. A member who chooses to engage in the Participant-Directed Option is considered the employer of his or her Attendant(s). A family member can assist in this. Current pay is $20/hour+. All pay is handled by a fiduciary group authorized by State of Maine.
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You can! 😊 Absolutely yes here in Minnesota! My POA brother wouldn’t approve paying a “nonprofessional” caregiver, so I contacted an agency, was trained, and hired to care for my father. (Actually I knew more about my father’s care needs than the agency did, but I guess I’m “a professional” since I work through an agency.). My father has always had a generous heart and I know he would approve of paying any of his children to help with his care needs. (and no judgment please about “how can you charge to care for a parent?” There are solid reasons for this decision and none of them are based on selfish motives)
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Suggestons of "gifting" money to the caregiver might work in exchange for care but will not earn any Social Security Credits. OP did not seem to be asking about qualifiyinfg for Medicaid but may be looking for a way to build SS credits. SS Credit can probably be arranged, but would involve all the proper legal and tax paperwork.
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The answer will be different if the monies paid to you are from LTC Insurance or from his bank account.
However you agree to be paid for the work, he must pay a payroll tax and SS/Disability to the State because you can get a forever hurt.
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You could pay a family member, however you need to have an actual contract with the family member, keep payroll records, etc just like if you were a company. In order to set this all up correctly and keep appropriate records/reporting of earnings, you really need to talk to someone like a CPA. The CPA may even refer you to an atty.

You don't want any mistakes with this because if your person runs out of money at some point and needs Medicaid to pay for a NH bed, the payments could be viewed as a gift. Gifts create penalties where Medicaid decides how many months they will NOT pay for the bed.
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In my case, I care for my Dad along with a paid company who provides 6 hours daily. This was worked out with Dad before he started into dimentia. I also fill in when the aide can’t make it and have a solid 2 days a week with him. I do his shopping, his doggie pet care and his appointments as well. As my siblings are aware and agree, my Dad pays me monthly through his bank. In our state, a parent is allowed to ‘gift’ a child for up to 15K per year with no 1099 or W2, and since I’m on SS it doesn’t affect that either. I also have the option of being employed by the same company where Dad’s aide works and caring for Dad. That’s perfectly legal and I would still earn SS credits. But at my age, I prefer it this way. Win. Win. I get to see my 94 year old Daddy and help in his care!
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my2cents Jun 2023
The gift you are talking about - is that for IRS? IRS and Medicaid are usually two different things. Medicaid, even in your state, may count anything they consider a gift, as a penalty should your dad run out of money and need Medicaid to pay for a NH bed.

Your situation is different than on this post. You already get SS and probably of an age where you no longer have limits on your earnings (like folks who draw SS at age 62). Once you start drawing SS for retirement, you no longer earn credits because you're drawing SS based on your earnings prior to retirement. You don't need any credits to determine your SS amount. (If you're drawing SS based on disability, SS could determine you are earning money and no longer fit the definition of being unemployable).
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I am notvsure if what Caty suggests should be done. The problem with this set up is if Medicaid is ever needed. There is a 5 yr look back. Any money "gifted" would be questioned and maybe penalties. Yes, there is an IRS law that allows gifting tax free, I think its 15k a year but Medicaid does not honor that.
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TopsailJanet Jun 2023
I agree. Also it seems George is concerned about SS credits which would not be accrued if it is handled as a gift. George should consult a local agency or accountant and set it up with all the proper withholding and taxes paid. It is quite possible, but will take some work to do it right.
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YES A SMALL AMOUNT LIKE $200 A MONTH, CALL THE COUNTY WHERE YOU IVE OFFICE OF AGING.
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A family member can be a paid caregiver. To get around labor and tax rules, have an agreement whereby the person getting the care gifts money to the caregiver. I had that arrangement with my mother for the hours I provided care outside the hours she had paid care by CNAs. That way, the caregiver (me) didn't have to report the gifts as income. I also made sure that Mom signed the checks. However, after Mom died, my brother demanded the Probate Court give him half of these gifts, though he had provided no care, so be sure to have an agreement with siblings that they will respect this agreement. As it turned out, Mom had such a large amount of paid care that she didn't need the extra tax deduction if she had included my care as paid care.
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TakeFoxAway Jun 2023
What is the limit on gifting? How much can they gift? Did you have to report it?
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The rules surrounding this type of labor arrangement can vary by state so I would search within your state (either Dept of Labor or SS/elder care topics). As others have stated, the person who hired the caregiver becomes an employer and thus all their states' labor and employment rules will apply. Paying quarterly withholding taxes will be required and not without penalty if screwed up or not paid on time. This is where accountants and bookkeepers can come in. A W2 form needs to be submitted at the end of the year to the employee, and the employee then needs to report the wages on their income tax form. An employer may also need to have liabililty insurance. All this is why I hired an agency to provide aids to my LOs.

You should also have a written employment contract that has been reviewed by an attorney. States and even counties can have differing overtime and personal leave laws. Some states will have a rule that a family member can never be a paid caregiver (I read it on this forum but don't know for certain if this is true). I've been a corporate employer for 38 years and I outsource the whole payroll/tax withholding thing as much as possible since I find it odious. Paying a caregiver as an employee will require perfect record-keeping since "ignorance" is never a defense you are able to use with the IRS. Also, I'm not sure how it works if you aren't a legal entity such as a LLC or incorporated. I'm not saying this arrangement is impossible... you just need to go into it educated and with your eyes wide open.
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You would need to pay income tax on money earned. Being an independent contractor means that you should pay quarterly on your estimated earnings to the IRS (at least that's what used to be required in the past of an independent contractor). You should ask a professional tax person how that is handled because it needs to be done correctly in order to avoid problems with the IRS in the future.
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I pretty sure you can and not work for a company. You would be a private contractor at that point, but you’ll need to file at least quarterly. Your best bet is to contact SS directly for your answer.
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ConnieCaretaker Jun 2023
I believe a Certified Public Accountant (CPA) could keep you on the straight and narrow and avoid any government scrutiny and fines (Yikes!).
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Hi, GeorgeZ, and welcome to Forum.

What an interesting question.
I have to admit that I have no idea, but some here may. Igloo and MstrBill are usually great with these questions so hope they weigh in.

Your accountant, your tax person, and certainly an elder law attorney would be able also to answer this. My suspicion is that it would depend entirely on HOW you are paid. For instance, if your own family member hires you and you have a care contract, then your salary would be reported both by family member and by you as income.

I do know that in the recent past RealyReal made an interesting comment about those who have a family member living with them. Charging "rental" has tax repercussions, whereas a "shared living costs contract" may not.

These are complicated questions, ones you don't want to get wrong because no one likes to have to deal with the IRS. I hope you will update us with what you find out as you research. And hope others here have solid answers to this interesting question.
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Yes, but you need to work for an agency. If your being paid by the family member, that person needs to take the SS out of you pay, match it dollar per dollar and send it to Social Security. They must match it or your SS payments will be less. There is a word for it when an employer does contribute his portion.
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