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Tax status of private duty aides

Bethesda, MD |

Could the IRS maintain the aides in this arrangement are my mom's employees, or would the IRS agree they are independent contractors or the agency's employees?

My mom has two private duty aides each 12hrs/day. The agency chooses the aides and sets their hourly rate. We do not interview any of the aides--the agency tells us the name of the aide and the person shows up. When an aide takes a day off, the agency assigns a substitute and informs us. The agency states that their contract with the aides states they are self employed and responsible for their own taxes. They claim they are a "referral" service and provide no 1099s for aides. The aides bill my mom by entering their hours on the agency billing form and my mom writes a check to the aide.

Also the agency said that for a fee, we could write a check directly to the agency and they would pay the aides out of an escrow account. Would that process mitigate any risk of the IRS considering the aides my mom's employees?

Attorney Answers 3


Under the facts that you give, the aides can be considered independent contractors to your mother, not employees. However, you may have to issue Form 1099's to them if they are paid over a certain amount. You should get a copy of the standard contract from the agency in case there is any question later.

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As the prior attorney mentioned, it would appear that these aides are not your employees, but independent contractors. If anything they would be the agencies employees. Your mom should keep a record of all payments made. She would have to report to the IRS on a Form 1099 all payments greater than $600. She needs to have their addresses and social security numbers for the Form 1099. She also need to submit a transmittal form called a Form 1096 with the Form 1099s.

Hope this helps.

Mr. Fromm is licensed to practice law in PA. The response herein is not legal advice and does not create an attorney/ client relationship. The response is only in the form of legal education and is intended to only provide general information about the matter within the question. Oftentimes the question does not include significant and important facts and timelines that if known could significantly change the reply or make such reply unsuitable. Mr. Fromm strongly advises the questioner to confer with an attorney in their state in order to ensure proper advice is received.
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I agree with the other attorneys. Make sure your mom requests a Form W-9 from each of these aides to get their tax ID numbers, names, and addresses for the submitting 1099's at the end of the year. She should also maintain a copy of their contracts that indicates they are independent contractors and responsible for their own taxes. Another nice fact would be that these aides work for multiple clients.

Any individual seeking legal advice for their own situation should retain their own legal counsel as this response provides information that is general in nature and not specific to any person's unique situation. Circular 230 Disclaimer - Advice given in this response cannot be used to eliminate penalties with the IRS or any other governmental agency.

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