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Hiring a Caregiver - Employer Responsibilities

Increasingly, people are assuming responsibility to hire their own caregivers.  Many people prefer this option claiming they get more service for the same amount of money and they report feeling greater control of the caregiver relationship.  However, before exercising this option make certain you’ve considered all the issues associated with becoming your own caregiver employer.

Before hiring, always ask for and thoroughly check a potential employee’s character and employment references, even if you plan on hiring a relative as a caregiver.  Keep in mind, however, that occasionally former employers will say good things about bad people or bad things about good people. Once you have identified a person you would like to hire as a personal assistant, you should conduct a criminal background check. There is a small fee for this service but it’s a good investment to provide a layer of protection. If you use a payroll management agency, ask them if they automatically perform background checks as part of their standard practice.

If you pay a “caregiver” to assist you with tasks like cleaning, shopping, errands, bathing and dressing, and that person does not work for an agency or organization, you are probably that person’s “employer” – and you may have specific responsibilities under both state and federal laws, including payroll tax withholding. Your responsibilities depend on the total wages that you pay the employee. If a relative or friend helps you with the paperwork or sending in the tax payments, you are still considered the “employer”, so long as your funds are used to pay the caregiver. Your relative or friend will need to make sure that all the tax and immigration forms identify you as the employer.

An employer’s responsibilities are somewhat complicated because they involve two levels of government, federal and state. If you employ a caregiver, you may have payroll withholding responsibilities in the following areas: 1) Employee Eligibility Verification 2) Federal Income Tax 3) Federal Social Security and Medicare Taxes 4) Federal Unemployment Tax 5) Vermont Income Tax 6) Vermont Unemployment Tax 7) Workers’ Compensation Insurance

If an employer does not withhold federal taxes for an employee, and the employee is assessed delinquent taxes at the end of the year, the employee can ask the IRS to investigate the situation by filing a Form SS-8. The IRS has the power to assess penalties and interest against an employer who fails to file returns or pay taxes as required. The amount of the penalties are calculated by the IRS, based on the failure to file the required forms, the amount owed, and the amount of time the tax has gone unpaid.

If you cannot manage the required payroll withholding and payments for your employee(s), or if you do not wish to manage these requirements yourself, you can hire a private bookkeeper, accountant, or a payroll service company to manage these tasks for you.