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Paying a caretaker in cash with conditions - is it legal?

4 answers | Last updated: Aug 06, 2013
Mel47 asked...

Caring.com User - Steve Weisman
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Steve Weisman hosts the nationally syndicated radio show A Touch of Grey, heard on more than 50 stations, including WABC in New York City...
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Your question is quite long, but the answer is quite simple. You are not complying with the law if you make these payments in cash without the proper deductions and reporting. This person is an employee and you have certain requirements in regard to tax reporting, tax withholding and workers compensation insurance with which you are not in compliance. I know this is not the answer you want to hear, but the risk of not complying with the law could be significant.


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AngilTarachRN answered...


You are missing out on alot due to this situation. One is why cause yourself a financial loss because an unethical caregiver wants to be paid cash? She is committing fraud, and you are involved because you know the situation.

Hiring a private person puts your parents at risk for a host of problems. She does not carry liability or workman's comp I assume? She can sue your parents if she is injured in their home, your parents have NO recourse if she causes harm to either of them.

There are tax benefits for eldercare that you and your parents are not able to access because this caregiver is directing how you do things.

She may do a decent job, but when you say you still carry a heavy load and she's there 40 hours a week, what is she doing all those hours? There are services available that would significantly improve your family situation, but you are unaware of those because a private caregiver doesn't have the knowledge to provide answers.

$2000 a month is NOT $500 a week. You should sit her down and show her how she has been overpaid and plan on deducting what she has been overpaid. My guess is she may quit at that point, so be prepared in adavance to replace her. If you had an ethical agency in place you would be able to recoup your overpayments.

I know a lot of families hire private caregiver's because they are generally less expensive than agencies, but the risks and lack of resources is not worth the cost savings. In the end it could cost so much more.

If this caregiver is unethical about her income, what other areas of her life and work is unethical? Where else is she dishonest?

I suggest contacting the VA for a list of agencies they recommend, and start interviewing. Your parents will adjust. Your parents also have the possibility of getting respite care hours paid directly throught the VA, aside from the aid and attendance pension benefit. The care will have to be through an agency that contracts with the VA, but then you and your parents will be protected, your financial worries will be over, and most likely the agency will have knowledge of resources that will help your situation.

There are medication management companies that can resolve your duty in getting meds, setting up meds, and contacting their doctors about their meds, and refills. If you email me I can give you some resources that will help with that.

Believe me when I tell you if you change this situation to agency caregiver's you will have much less stress.

I wish you and your parents well! Angil Tarach-Ritchey RN, GCM Visiting Angels, Ann Arbor


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NewMexicoTam answered...

We have a private caregiver because my dad needs 24/7 care, and cannot afford the $7700 it would cost thru an agency. We luckily found someone who was a nurse and had a lifetime caregiving background, who also needed a place to live. She gets to live with my dad (near the ocean, i might add!) and we pay her $397 twice per month, no taxes taken out, no W2. I know that is pathetically low, but she also can borrow money from my dad if she needs it. It's a mutual arrangement and we're both grateful. I am aware of the legal risks we took but we had no choice. We had her sign an arbitration agreement, checked her background and references, and so on. She's been a blessing and soulmate for my dad. As far as your situation, I cannot speak about the legality part, but I can tell you that I had the same discussion about the monthly fee vs bi-weekly or semi-monthly with her. Once I explained the math, she was fine with the calculation. $2000/mo times 12 months = 24,000 annually, divided by 52 weeks = $461.54 every friday. She should be ok with this, since she agreed to 2000 per month. Let us know how it turns out! Good luck.


Jade1961 answered...

I do not know what that laws are in your State regarding aid for those who wish to remain in there homes with a caregiver instead of going to a nursing home I can only tell you my experience.

I am disabled and live in PA. We have a program called the Independence Waiver Program. It is run by the State and allows you to utilize an Agency to provide caregivers, that you choose, they pay for these caregivers out of your "allotment" from the State. Your parents would be granted a certain number of care hours per week depending upon what all is needed in the home. A caregiver or 2 if the hours exceed 40 as mine do comes & goes their "time-sheets" are signed by either yourself or your parents and the Agency pays them.

Mr. Steve Weisman is correct in all that he is saying. You can most likely find out about any programs like this through either your County Assistance Office (Welfare) or through your local center on aging.

This is just an idea based on my own experience.

I wish you well & God Bless.


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