Did you know that an in-home caregiver needs a W-2 at the end of the year? The days of writing a simple check to that person who comes in to help care for Grandma are long gone.

Caregivers are considered Household Employees and therefore it is against the law to not pay them accordingly.

To sort through all of this, Vashon Care Network recently engaged IRS tax expert and business consultant Deborah Diamond to talk about the business aspects of professional caregiving and how caregivers can prepare for their own financial security. In a recorded one-hour workshop, Diamond carefully outlined details both for those doing the hiring and those doing the work.

A link to view Diamond’s workshop is now online and accessible to all here.

Some of the key points for caregivers included the fact that everyone needs 40 quarters of reported income to be eligible for Social Security and Medicare benefits. When working as a caregiver, it is up to the employer and employee to report this income.

In fact, if a caregiver is paid more than $1,000 in a quarter or $2,400 in a year, it’s against the law to not pay them as employees. And when a caregiver is reporting their income as an employee and that work discontinues (because their client dies, or is rehabilitated, or for another reason), they can apply for unemployment.

Diamond also spoke to those hiring a caregiver, explaining how to get an Employer Identification Number (EIN) and about “best practices” to stay legal and profitable.

Additionally, the Vashon Care Network has added a whole section on their website, at vashoncarenetwork.org, explaining how to hire a caregiver. A directory of available caregivers is available at the website to help in finding a caregiver for your loved one.

Diamond’s workshop also included information on organizations that are in the business of hiring caregivers to be placed in private homes. Using this model, the caregiver becomes an employee of that outside organization, and the family does not have to set up a system to pay a caregiver as an employee. The company hires the caregiver and pays all the payroll taxes, and the family pays the company for this service.

Diamond worked for the Internal Revenue Service for 33 years as an auditor, and in government relations and public education. More recently, she served with VashonBePrepared to help local businesses take advantage of the various programs offered under the Covid Relief Acts. She is experienced in providing free tax assistance to independent caregivers through AARP Tax Aide.

The Business of Caregiving workshop was sponsored by the Vashon Care Network Caregiver Support committee, with help from a grant from Granny’s Attic.

— This article was authored by Janna Gingras in collaboration with Vashon Care Network leadership.