Hiring In-Home Care: What to Consider

If you’re considering hiring someone to provide in-home care for yourself or a family member, understanding how the arrangement is structured can help you plan for tax and recordkeeping responsibilities.

If You Hire Someone Directly
A caregiver will generally be considered a household employee if you control their schedule, duties, and how the care is provided. You may pay them in cash, but keeping detailed records of payments is important. For 2026, if you pay one caregiver $3,000 or more during the year, Social Security and Medicare taxes generally apply, and you may need to issue a W-2 and report household employment taxes. Additional unemployment tax requirements may apply if you pay household employees $1,000 or more in any calendar quarter.

A written agreement outlining the caregiver’s duties, hours, and pay can also be helpful. Consider consulting an attorney regarding the agreement and liability considerations, as well as your insurance provider to confirm what coverage may apply.

If the Caregiver Is Self-Employed
If the caregiver operates their own caregiving business and controls how they provide their services, they may be considered an independent contractor. When you hire them personally rather than through a business, you generally would not need to issue a 1099. The caregiver would be responsible for reporting their own income.

If You Hire Through an Agency
When you work with a caregiving agency, the agency generally handles the caregiver’s payroll, taxes, and reporting. An agency may also provide additional flexibility if your regular caregiver is unavailable, as another caregiver may be available to provide coverage.

Keep Good Records
Regardless of the arrangement, keep records of the services provided and amounts paid. Some caregiving expenses may qualify as medical expenses for tax purposes, depending on your circumstances.

If you’re considering in-home care and have questions about the potential tax implications, the TCS team can help you understand the tax considerations and recordkeeping requirements.