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Providing quality care in your home...
How Your Care Giver Is Paid 
Is Important!

    Harriet was wonderful!

    One of mother’s friends recommended her. She took care of mother for almost a year. Harriet was here five days a week, six hours a day. Harriet told us she was self employed, an “independent contractor.”  We assumed she would take care of her taxes. We paid her $550 each week.  After mother passed away we gave her a good reference and she was soon working for another family.

    About a year later we received a letter from the California Franchise Tax Board.  Harriet had applied for state education benefits and under penalty of perjury reported she had received income from us. The Board’s letter said no income had been reported, no taxes paid, and by California law Harriet was an employee rather than an independent contractor. We were therefore responsible for the employer’s payroll taxes, plus penalties. A month later a similar letter arrived from the IRS. 

    Furthermore, we learned that even if Harriet had been an independent contractor, California and federal tax laws require that we report her earnings.

Lessons Learned

As employers, we were required to:
    • Report starting employment then wages quarterly to the St of Calif.,
     and to the IRS annually.
    • Pay employer’s Social Security contribution
    • Withhold employee’s Social Security contribution
    • Withhold State Disability Insurance contribution
    • Pay Unemployment Insurance
    • Provide workers’ compensation coverage
    • Keep records of hours worked and compute pay by the hour
    • Pay at least $11.00 per hour ($12.00 as of January 2019)
    • Collect and forward voluntary withholdings for State and federal             taxes

Unpaid Taxes and Penalties

        Total compensation paid, 48 weeks  . . . . . . . . . . .$26,400
        Federal Income Tax  . . . .  . . . . . . . . . . . . . . . . . . . .  1,823
        Social Security & Medicare (15.65%) . . . . . . . . . .  .3,966
        TFRP 100% penalty for not withholding. . . . . . . .  3,966
           (Trust Fund Recovery Penalty)
        Delinquent Federal tax payment penalty . . . . . . . . .  568
        California State Income Tax . . . . . . . . . . . . . . . . . . .   284
        Unemployment, Disability Insurance (6.7%) .  . . .. 1,405
        Workers’ compensation insurance . . . . . . . . . . . .  . 1,045
        Non coverage workers’ compensation penalty
            (minimum) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  . .1,000
        Failure to report wage penalty, IRS . . . . . . . . . .  . . .  528
        Failure to withhold penalty, IRS . . . . . . . . . . . .  . .  1,200
        Delinquent payment penalty, IRS . . . . . . . . . . .. . . . . 272
        Underpayment penalty, IRS . . . . . . . . . . . . . . . . . . . . . 71
        Failure to keep time records, State . . . . . . . . . .. . . .2,400
        Attorney's account fees . . . . . . . . . . . . . . . . . . .  . .   3,600

        Total Wage, Fees, Taxes and Penalties . . . . . . . . .$47,568

        Hourly equivalent . . . . . . . . . . . . . . . . . . . . . . . . . .$33.03/hr.   

    These are estimated taxes and penalties based on EDD and IRS
    publications. Contact your tax adviser for a professional opinion. 
Updated Jan 16, 2017

10 Standards of Service








We strive to meet each of these ten standards continually for each client.  Your needs are systematically assessed to create an individualized service plan.
How Your Care Giver Gets Paid Is Important








State and federal tax laws require care givers be paid by a payroll process. Earnings need to be reported, taxes paid, workers' compensation coverage provided, and W-2's issues.
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