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I am wanting to hire a caregiver and pay them cash. Are there any laws/rules I need to be aware of?

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If you mean cash under the table you must know that is against the law in any situation.
And those willing to work that way are more apt to be dishonest themselves, or desperate enough that they are willing to give up the protection of labour laws and their ability to contribute to social security.
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BurntCaregiver Dec 2022
@cwillie

No, you are wrong about people being more "apt" to be dishonest themselves if they accept cash.
Caregivers who work for an agency don't make any money and their agencies screw them over at every turn. So they work a little on the side in cash to keep the lights on.
Or a married person who is on their spouse's insurance and
doesn't have to work a job for the benefits will appreciate a cash position too. Doesn't mean your LO won't get top shelf care or that the caregiver is some kind of criminal who will rip you off. They're not.
People hiring in-home caregivers should be less concerned about what way they get paid and be more concerned about checking up on their references, skill set, criminal back round check, and drug testing.
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Justperforming, you can hire someone and pay cash and it's all well and fine, until it isn't.

If the caregiver gets injured while working, they more then likely will NOT be covered by your homeowners insuramcd and if they are, it is very minimal for medical. Now it isn't all well and fine.

The caregiver or yourself gets audited and it comes out they have been receiving cash for work, it could fall on you to make up back taxes, including fines and penalties. Now it isn't all well and fine.

Your husband's care becomes to much for you and the caregiver and he needs Medicaid to be able to go to a facility. Now it isn't all well and fine.

These are just a few things that can go sideways with paying cash.

Only you know the true situation.

When I was looking for a caregiver for my dad, I found out she could spend 50 bucks to get a business license and then ALL the burden was on her for taxes and insurances. I offered to pay for the license. That was in AZ, so you have to check what is permissible in TN. I got this information through my insurance broker.
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PeggySue2020 Dec 2022
This is a creative solution to staying legal.

However, there are hordes of people who mutually agree on going under the table. If, for example, the worker is on Medicaid as she’s collecting over 100k a year, why would she need to involve their homeowners if something happens at work when she’s allegedly not working?

I know of people who have had whole careers doing this and raked in hundreds of dollars more than they would have by going legal.
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You will be required to fill out 1099 - Nec forms for tax purposes if you are hiring someone for any length of time. You must keep clear transparent records for your LO's taxes.
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@Isthisrealyreal

I must disagree about caregivers getting paid in cash ruining our social programs for needy people.
No, what's really ruining our social programs for needy people is the way the hospital, nursing home, and care industryare allowed fleece and violate Medicare and Medicaid without restraint. It's Washington lobbyists who fight tooth and nail to prevent the American government making a law that Medicare and Medicaid can negotiate with drug companies to get the best price on something.
This is what's ruining our social programs for the needy. You wouldn't be alone in your thinking though. People can't stand it when the little guy gets a taste once in a while and can maybe get ahead a little bit without giving a cut to Uncle Sam. Yet, when the very rich fraud, lie, and steal on a huge scale folks call it business.
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Isthisrealyreal Dec 2022
Burnt, of course you disagree.

If you wouldn't take my post out of context your response would be a moot point. I was specifically referring to peggysue's inlaws caregiver that not only gets paid 120k but, she is a live in, so she has no expenses, yet gets Medicaid. Thief!

Anyone earning 120k a year, is a thief if they collect welfare because they are being paid under the table.

I know what Washington does and it is reprehensible but, that doesn't justify ANYONE taking social services and earning that kind of money.

I don't think anyone should punk the system to get taxpayer dollars, not anyone. But, because people like you believe that not contributing and then collecting against the very system they object to paying taxes too is acceptable, it has become unsustainable. It is criminal and I would rather my tax dollars pay to incarcerate them. Even the dirty politicians on both sides that punk the system should be incarcerated for breaking the law.
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We pay legal for Mom(via check through accountant social security taken out, workers comp, etc)

Several of our caregivers have worked cash gigs.

IRS caught one caregiver as she was depositing all of the cash in her bank. Both caregiver and
employer paying cash paid about $6000 in penalties to the IRS.
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When you hire an aide, you need to look towards the future.

The IRS does not look at aids as self-employed. The IRS looks at you as the employer who should be taking out payroll taxes.

The other problem is...will Medicaid LTC ever be needed. If so there is a 5 year look back in most states. A large amt being withdrawn weekly maybe questioned.

I would check with your Labor Board how Aides are handled. If after you are made aware of how it all works you still want to pay cash, thats between u and the aide. Do not keep large amounts of money in your house unless you have it safely put away.
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When managing any estate, you need to do everything with complete transparency and tight record-keeping. If you want to pay the aide with monies you would otherwise allocate to yourself, just keep those records clearly.

No professional agency will allow cash payments so it would mean hiring an unknown to care for your LO.

I wouldn't do this myself and find the idea ill-advised. This goes against labor laws and would be of benefit to no one.
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Well this depends on a number of things.

Is the cash being paid from your LO or you personally and NOT associated w/their accounts? If at a later date paid by your LO/from their accounts and later your LO needs to qualify for Medicaid those cash withdrawals w/no receipt could impact later Medicaid qualification as others have said. If there is lots of money and it is unlikely Medicaid will come into play OR if you personally are paying out of your own personal funds NOT tied to your LO and have lots of money to keep that up for the entire run of their need, then that is a different story.

Also, how long is this cash payment plan likely to go on? A couple of weeks is one thing, a year or more is a different matter.

Yes, technically if one "hires someone" for a job (State and Local laws/rules are different and there are Federal laws/rules too) there are tax and benefit compliance issues (tax withholdings, Social Security and Medicare withholdings, in some cases payment into state workers comp funds or health insurance benefit payments that need to be made by the "employer"). Each State and locality has different laws and rules. SO YES this exists and only an attorney licensed in your state could advise you properly of what those laws/rules are and what if any legal issues may arise out of the cash payments. And one has to choose, does one comply or not with those laws/rules; and what risks OR downstream problems may arise if NOT following those laws/rules. PS "ignorance is not a defense" in legal matters.

Hiring through an agency, handles all of these matters but that does NOT mean one should ONLY go through an agency.

As others have said, how to pay the aide is one part of consideration. Is that aide qualified to do this care? What is the plan if the aide is ill or wants to go on vacation (who fills in, agencies work that out for you)? What if any background checks have you done? What if any legal agreements (not just verbal) have you written out between the two of you so there is not a conflict or controversy later? What type of input/follow up do you expect, weekly updates about your LO? Lots to consider.
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Having been an independent contractor for most of my life, it is my understanding that it is / was up to the recipient to report cash as part of my income when filing tax returns. If your caregiver is through an agency, ask them.
* One client I had rec'd tax breaks due to hiring me and she provided me a W2. No other client, of many, did that. As an independent contractor, I kept / keep accurate records and report accordingly.
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my2cents Dec 2022
If you are a contactor, you would get a 1099 from people you work for. One copy to you and one to the IRS to ensure all income is reported and taxes paid. It is intended to reduce/prevent unreported earnings that people don't pay taxes on.
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Justperforming: Perhaps this wouldn't be a good idea for many reasons, e.g. There is no record of said transaction., Are they reporting said income on tax returns and if so, are you, the EMPLOYER, withholding federal and state taxes?, et al.
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