"The difference between an employee and an independent contractor hinges on control in the workplace," says Stephanie Breedlove, head of Care.com HomePay, managed by Breedlove.
"An employee is someone who doesn't have control of their work environment and therefore reports to and works for someone else."
You have an employer-employee relationship with your senior aid, meaning that you are in control of how she
spends the day with your parent or elderly relative.
takes your loved one to run errands, helps them get ready for the day, administers their medication and handles any issues that come up - all based on your strategies or the advice of a physician.
Together, you are a team, but ultimately you call the shots and she
is an employee.
And as an employee, she
comes to your home (or your senior's home) and uses any necessary supplies provided there.
What Is an Independent Contractor?
"An independent contractor, if classified correctly, has complete control of their work environment," she
"Senior caregivers are classified as employees and don't meet the independent contractor criteria; therefore, the employer must administer the payroll and tax process, withhold the taxes correctly and remit them to the government," comments Breedlove
It may seem easier to have your senior helper file as a contractor, but because she
is a household employee, your incorrect filing will be considered tax evasion by the IRS
"If you misclassify your senior caregiver, you are subject to tax evasion charges, and that comes with back taxes and penalties that everyone wants to avoid," says Breedlove
It will also be worse financially for her
to file as a contractor.
will end up paying more taxes at the end of the year because she
will be required to pay self-employment taxes as a contractor.
Yes, at least she
is filing, but if she
hasn't been keeping up with those additional taxes all year long, she
could end up owing a lot of extra money come April.
And having her
file as an independent contractor will disqualify her
from certain government benefits, such as unemployment insurance.