Helping my neighbor. She had to pay $140/day for caregivers (22 hrs/day) in 2008. She wants to write off this expense as a medical necessity because she needs medical help 24/7. She is over 80 and is blind. She has no personal info, and does not pay payroll taxes. She can't afford agency pay. I don't know what to tell her, she can't afford a tax accountant, etc... can you help?
If the caregiver is an independent contractor she maybe ok on the payroll taxes and will just have to 1099 the caregiver. Otherwise, she should file the caregiver as a household employee, pay the employment taxes, and take the medical expense deduction.
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