Private In-Home Caregivers and Taxes.

This post is intended to be a resource for the Private In-Home Caregivers we at Abby Services work together with.

If you are a client reading this, we at Abby Services help caregivers and clients by submitting to the IRS, a Form 1099 on each caregiver working with you who earns over $600 dollars in a year. This form reports to the government an in-home caregiver’s earnings for the year. If your tax professional would like to see a report on your spending through our service we are happy to provide that.

My name is Scott Strachan. I am a nurse and one of the owners of Abby Services. I am not a tax professional and must defer to a CPA for any questions. This information is meant to simply help guide Independent Contractors to available resources.

The following information is adapted from The Small Business Administration Website:

Independent Contractors are commonly referred to as consultants, freelancers, or being self-employed.  Independent contractors are individuals who are hired to do a particular job, receiving payment only for the work being done. Independent contractors are business owners and are not their clients’ employees. They do not receive employee benefits or the same legal protections as employees and are often responsible for their own expenses. Many Independent Contractors use a separate Tax ID number for their business as opposed to using their Social Security Number. A Tax ID Number is free to apply for and can be obtained here. The form used is referred to as form ss-4 and a PDF version is available here.

Part of being an Independent Contractor is managing your own taxes.

Independent contractors must pay federal taxes on income and FICA; however, your client will not withhold taxes for you. As a business owner, you will need to pay estimated taxes throughout the year instead of once a year on April 15.

Not following these laws can get you into big trouble.

The following IRS resources will help you understand how to pay federal taxes as an independent contractor:

Self-Employed Individual Tax Center

• Get all the information you need on federal tax at this one-stop resource for independent contractors.

Federal Tax Forms for Sole Proprietors

• Obtain a list of IRS forms frequently used by independent contractors.

One of the common forms referenced and used by Independent Contractors are quarterly income reporting forms or form 941. This form is required for individuals who expect to earn over $1,000 for the year. If it is anticipated that an Independent Contractor will earn less than $1,000 for the year an annual form 944 may be used.

As I said at the beginning, taxes can be confusing and in my opinion are best left to tax professionals. Hopefully some of these resources can help.

If you are a private in-home caregiver looking to provide care to seniors in their homes call Abby Services today so we can help refer you to the best clients in our area! Just call 239-590-0861!