When a family pays someone directly to care for an aging parent at home, the IRS says that caregiver is typically the family's employee, which points to a W-2 and not a 1099.

So the W-2 or 1099 question usually has a short answer. The work is in what follows: an employer number, a few federal forms with real deadlines, and taxes you can pay through the year. Paying a spouse, child or parent changes the rules, not always in your favor. This guide takes each step in order, with the 2026 figures.

In This Guide

Caregiver W-2 or 1099: Why the Answer Is Usually W-2

The IRS says in-home caregivers for elderly or disabled people are typically employees of the people they care for, because they work in those homes and the people they care for have the right to tell them what needs to be done. The test is control: an employer-employee relationship generally exists when the payer can direct not only the result but the details and means of the work.

Forms 1099-NEC and 1099-MISC are reported only for payments made in the course of the payer's trade or business, and the IRS instructions say personal payments are not reportable. A family paying a caregiver for personal household services, outside any business, has no Form 1099-NEC to issue for those payments.

A caregiver can't simply agree to be an independent contractor. Under the Treasury employment-tax regulation, if the employer-employee relationship exists, that label is of no consequence.

When Your Caregiver Isn't Your Employee

  • An agency employs the worker. Under IRS Publication 926, a worker an agency provides and controls (what work is done and how) is not your employee. Hiring through an agency, or from an agency's list, doesn't change that answer when you still control how the work is done, and neither does full-time or part-time work.
  • The caregiver runs an independent business. Publication 926 treats a worker as self-employed only if the worker alone controls how the work is done; a self-employed worker usually brings their own tools and offers services to the public in an independent business.
  • The caregiver is a close relative. Some family wages are left out of the federal employment taxes, as the family section below explains.

A caregiver who isn't anyone's employee still reports the pay as income on Form 1040 or 1040-SR and may owe self-employment tax, depending on the facts.

The 2026 Numbers That Decide What You Owe

Two separate federal thresholds decide which household employment taxes apply; you can meet one without the other.

Tax When it applies in 2026 Rate Who pays
Social Security and Medicare Cash wages of $3,000 or more to any one household employee 15.3% of cash wages: 7.65% employee share, 7.65% employer share Both; you may pay the employee's share yourself instead of withholding it
Federal unemployment (FUTA) Total cash wages to household employees of $1,000 or more in any calendar quarter of 2025 or 2026 6% of the first $7,000 per employee, less a credit of up to 5.4% for state unemployment contributions: 0.6% net in most states, more in a credit reduction state (for 2025 wages, California and the U.S. Virgin Islands) Employer only
Federal income tax Only if the employee asks and you agree Per Form W-4 Withheld from the employee's pay

The Social Security, Medicare and FUTA rates and thresholds come from Publication 926 for 2026; the Social Security Administration set the same $3,000 threshold. Unlike Social Security and Medicare, FUTA is never withheld from the employee's pay; it all comes from your own funds.

In a credit reduction state (one the U.S. Department of Labor finds hasn't repaid federal money it borrowed to pay unemployment benefits), your 5.4% credit is reduced and you owe extra FUTA tax on wages subject to that state's unemployment tax law, figured on Worksheet 2 of the Schedule H instructions. The credit is also limited when state contributions are paid late: for 2026 wages, contributions paid after April 15, 2027, earn only 90% of it. For 2025 wages, only California (1.2%, for a 1.8% FUTA rate instead of 0.6%) and the U.S. Virgin Islands (4.5%) had reductions. The 2026 list isn't final until November 10, 2026, so don't assume it will match 2025.

A worked example. Say you pay one caregiver $20,000 in cash wages in 2026, in a state with no credit reduction, and pay state unemployment contributions on time. Social Security and Medicare tax is 15.3% of that, or $3,060: the caregiver's $1,530 share you withhold, plus your matching $1,530. FUTA covers only the first $7,000, so at 0.6% you owe $42, plus any state unemployment tax.

The Household-Employer Checklist, in Order

Step 1: Get an employer identification number

If you pay Social Security and Medicare wages, FUTA wages or wages with federal income tax withheld, the forms you file need your employer identification number (EIN), a nine-digit IRS number that isn't your Social Security number. Use one you already have from a business; otherwise apply online at IRS.gov/EIN, or by fax or mail on Form SS-4. On Form SS-4, an individual who will employ someone in their household checks the "Other" box and enters "Household employer" along with their SSN.

If you'll pay $3,000 or more in Social Security and Medicare wages in 2026, or withhold income tax, ask for your caregiver's Social Security number no later than the first payday, ask to see the card, and record the name and number exactly as shown on it. A caregiver without a number applies on Form SS-5.

Step 2: Complete Form I-9 within 3 business days

A family that hires someone to work in its home for wages generally must complete Form I-9, Employment Eligibility Verification, the same as any employer. The main household exception is casual work: domestic service in a private home that is sporadic, irregular or intermittent isn't "employment" for this rule. No Form I-9 is required for a domestic worker employed by a domestic service company or temporary-worker agency, or for a genuine independent contractor.

Your caregiver completes Section 1 on the first day of work for pay, and you complete and sign Section 2 within 3 business days of the hire, after examining the caregiver's identity and work-authorization documents. If the job lasts less than 3 business days, both sections are due by the first day of work for pay. You keep the form yourself (it is never mailed to the government) until three years after the hire date or one year after the job ends, whichever is later.

If your caregiver's work authorization expires, you must reverify it on Supplement B no later than the expiration date (or, for an automatically extended work permit, when the extension ends) and keep that with the original form. Reverification is never required for a U.S. citizen or noncitizen national, or when a U.S. passport, passport card, Green Card or List B document expires.

E-Verify is voluntary under federal law, except for employers with a federal contract clause requiring it, in states whose laws require it, or under a court order. It never replaces the I-9.

Step 3: Collect a Form W-4 only if you agreed to withhold income tax

If your caregiver asks you to withhold federal income tax and you agree, get a completed Form W-4 and pay the withheld tax to the IRS. If you don't agree to withhold, there's no W-4 to collect.

Step 4: Report the new hire to your state within 20 days

Federal new-hire reporting reaches household employers: the federal Office of Child Support Enforcement says the employer-employee relationship triggers it, not an income tax withholding threshold. The report is due no later than 20 days after the hire date (an employer reporting electronically may instead use two monthly transmissions 12 to 16 days apart), and some states require it sooner. Find your state's reporting website from the federal new-hire reporting page.

Step 5: Pay the taxes during the year, not all at once

Household employment taxes (Social Security, Medicare, FUTA and any withheld income tax) go on Schedule H, attached to your Form 1040, 1040-SR, 1040-SS, 1040-NR or 1041, and are added to your income tax. To avoid owing it all with your return, have more withheld from your own pay (Form W-4) or pension (Form W-4P), or make estimated payments (Form 1040-ES). Paying too little during the year may bring an estimated tax underpayment penalty.

If you own a business or farm operated for profit, you can instead report household wages on the business's Form 941 or 944 (943 for a farm), include FUTA on Form 940, and skip Schedule H. You can't deduct a household employee's wages or taxes on Schedule C or F.

If the caregiver looks after a spouse or dependent who can't care for themselves and lives with you more than half the year, so that you can work or look for work, you may qualify for the federal child and dependent care credit, and your share of the employment taxes counts as a qualifying expense along with the wages. See tax breaks for family caregivers.

Step 6: Give an earned income credit notice when it's required

An earned income credit notice is required only if you agreed to withhold income tax and the withholding tables show none should be withheld, though the IRS encourages giving it to lower-paid employees anyway. The notice on the back of W-2 Copy B counts, as does IRS Notice 797.

Step 7: File Form W-2 and Form W-3 by February 1, 2027

A 2026 Form W-2 is required for each household employee paid $3,000 or more in Social Security and Medicare wages in 2026, or any wages with federal income tax withheld. Otherwise, the IRS encourages a receipt showing dates worked, wages paid and a general description of the work.

For 2026 wages, give the caregiver Copies B, C and 2 of Form W-2, and send Copy A with Form W-3 to the Social Security Administration, by February 1, 2027, on paper or online. If the caregiver leaves before year-end, you can give the W-2 right after the final wage payment. If a departing caregiver asks for it, give it within 30 days after the request or the last wage payment, whichever is later.

If you paid your caregiver's share of Social Security and Medicare taxes yourself instead of withholding it, that payment counts as wages for income tax but not as Social Security, Medicare or FUTA wages. Report the employee's-share taxes you paid in boxes 4 and 6 of the W-2 (not your own share), leave them out of boxes 3 and 5, and add them to box 1. On $100 of cash wages a payday, Social Security and Medicare wages are $100 and income-tax wages are $107.65. If you withheld the share but ended up paying less than $3,000 in cash wages for 2026, repay it to the caregiver and leave it off the W-2.

If you paid overtime required under the federal Fair Labor Standards Act, report the part above the regular rate (the "half" in time-and-a-half) in the new 2026 W-2 box 12, code TT; your caregiver may be able to deduct it, though it is still generally subject to Social Security and Medicare tax.

Step 8: Keep the records for at least 4 years

Keep your employment tax records for at least 4 years after the due date of the return that reports the taxes, or the date you paid them, whichever is later.

To fix a mistake on a Schedule H filed with your Form 1040, 1040-SR or 1040-NR, file Form 1040-X with a corrected Schedule H, and generally a Form W-2 or W-2c to match.

Not sure which steps apply to your family? Brevy's care navigator can help you sort out what to file.

Paying a Family Member: Who Is Exempt and Who Isn't

Who employs whom Social Security and Medicare FUTA
Spouse pays spouse Excluded Excluded
Parent pays own child under 21 Excluded Excluded
Parent pays own child 21 or older Counted like any other employee's wages Counted like any other employee's wages
Adult child pays own parent for domestic work in the adult child's home Excluded, unless all three conditions of the parent exception are met Always excluded

A parent paying a grown son or daughter

The family exclusion for a child's wages from a parent ends at age 21. When a parent who needs care pays a son or daughter aged 21 or older as a household employee, those wages are counted toward the ordinary household employment tax tests like anyone else's. So a mother paying her 45-year-old daughter $3,000 or more in cash wages in 2026 owes these taxes just as she would on a stranger's wages.

A spouse caring for a spouse

Domestic-service wages one spouse pays the other are excluded from both Social Security and Medicare taxes and FUTA.

An adult child paying their own parent

When an adult child employs their own parent for domestic work in the adult child's home, federal law always excludes the parent's wages from FUTA, and generally excludes them from Social Security and Medicare taxes. The exception counts those wages for Social Security and Medicare only if all three of these conditions are met:

  1. The adult child is a surviving spouse, or divorced and not remarried, or has a spouse in the home who is mentally or physically unable to care for the adult child's son, daughter, stepson or stepdaughter for at least 4 continuous weeks in the quarter.
  2. That son, daughter, stepson or stepdaughter lives in the home.
  3. That child is under 18, or has a condition requiring an adult's personal care and supervision for at least 4 continuous weeks in the quarter.

Every condition turns on the employer's own son, daughter, stepson or stepdaughter. Paying your mother to help care for your father in your home doesn't, by itself, involve any of them.

One more exclusion: a caregiver under 18

Publication 926 also leaves out of Social Security and Medicare wages the pay of an employee under 18 at any time during the year, unless household work is that employee's principal occupation.

What about the W-2 for a family member?

The Step 7 W-2 test applies unchanged. A spouse's or under-21 child's wages, and a parent's unless the exception above applies, aren't Social Security and Medicare wages however large, but they are still subject to federal income tax. A tax professional can confirm this before you file.

Our guide to personal care agreements explains how families document paying a relative when Medicaid may be needed later.

If You Handle a Parent's Money Under a Power of Attorney

If you pay for a parent's care from the parent's money, the parent may well be the household employer, since the IRS says in-home caregivers are typically employees of the people they care for. Schedule H then goes on the parent's own Form 1040. An agent, such as an adult child with power of attorney, may make that return only if the parent can't because of disease or injury, or continuous absence from the United States for at least 60 days before the due date, or if the IRS grants a written request for good cause. The return must come with a power of attorney authorizing the agent, and a completed Form 2848 is enough. Help preparing the return is always allowed.

On Form SS-4, an individual applicant signs their own EIN application when a signature is required, but may name a Third Party Designee to receive the EIN and answer questions about the form until the EIN is assigned and released.

For Form I-9, the employer may designate anyone, such as an agent, to complete Section 2, but stays liable for any violations, and an employee can't be the representative for their own form.

Ask a tax professional who may sign other forms, such as a stand-alone Schedule H or Form W-2, under an ordinary durable power of attorney.

When a Program or Agency Already Runs the Payroll

  • A home care agency. A worker an agency provides and controls isn't your employee, under the rule set out in When Your Caregiver Isn't Your Employee.
  • A third-party agent or government agency that pays the taxes for you. If a government agency or third-party agent reports and pays the employment taxes on your household employee's wages on your behalf, you don't file Schedule H to report those taxes. In self-directed Medicaid programs, the Centers for Medicare & Medicaid Services describes the fiscal/employer agent as this kind of IRS-approved agent. Our guide to consumer-directed services explains how those programs work.
  • A payroll service you hire is different. Even if a payroll service or reporting agent withholds, files and pays for you, you generally stay responsible for the returns and payments, and the IRS says you are liable for all taxes, penalties and interest if the service fails. Keep your own address on file with the IRS, and enroll in the Electronic Federal Tax Payment System (EFTPS) with your own PIN to check that payments are made.
  • A family caregiver paid by a state agency or insurer. The IRS says a family member paid to care for a relative who receives Form 1099-MISC with the amount in Box 3 doesn't owe self-employment tax if not in the business of caregiving, and reports the amount as other income on Schedule 1.

Whether Medicaid waiver pay is taxable at all is a separate question, covered in Are Medicaid Waiver Payments Taxable?

State Rules to Check Before You Start

States add to the federal steps in a few places.

Workers' compensation, liability coverage and wage-and-hour rules are covered in Paying a Family Caregiver: Workers' Comp, Liability and Who Carries Them. Still choosing between an agency and hiring directly? See how to hire an in-home caregiver.

Frequently Asked Questions

Can I just give my mother's caregiver a 1099 at the end of the year?

No. A family paying for personal care outside any business has no 1099 to issue: the federal statute, 26 U.S.C. 6041(a), applies 1099 reporting only to people engaged in a trade or business.

Do I pay Social Security tax if I pay my daughter to care for me?

If your daughter is 21 or older, yes. Once her 2026 cash wages from you reach $3,000, you withhold her 7.65% share of Social Security and Medicare taxes and pay a matching 7.65% employer share yourself, or you can choose to pay her share too instead of withholding it.

Do I need a Form I-9 for a caregiver I hire privately?

Generally yes, under the rules in Step 2. Whoever fills out the form, a household may not employ a caregiver it knows isn't authorized to work in the United States.

Does free room and board count toward the $3,000 Social Security threshold?

No. For a live-in caregiver doing domestic work in your home, the food and lodging you provide aren't cash wages, so they don't count toward the $3,000 test and aren't subject to Social Security and Medicare tax. Cash you give the caregiver in place of food or lodging does count as cash wages.

Is a live-in caregiver's room and board taxable income?

Not automatically. For federal income tax, lodging in your home is excluded from the caregiver's income only if it is for your convenience and the caregiver must accept it as a condition of the job, for example because they must be available for duty at all times. Meals in your home are excluded only if you provide them for your convenience, not as extra pay. Lodging or meals that fail these tests are noncash wages subject to federal income tax.

If Medicaid pays my family caregiver, do the family exemptions still apply?

They can. The IRS says that when the person receiving care is the caregiver's employer, the household rules apply, so pay to a spouse, or to a child under 21 caring for a parent, generally isn't subject to Social Security and Medicare taxes. If the agency itself is the caregiver's employer, the payments are subject to those taxes. A caregiver who had these taxes withheld in error asks the agency for a refund first, and may file Form 843 if the agency won't correct it.

Learn More

CaregiverHow to Hire an In-Home Caregiver for an Aging ParentHow to hire in-home care for an older adult: home care agency vs hiring directly, what to screen for, and the household-employer tax rules most families miss. CaregiverPaying a Family Caregiver: Workers' Comp, Liability and Who Carries ThemIt depends on who employs the caregiver (you, an agency or a Medicaid fiscal agent) and your state. CA, MN, NY, OR and WI rules, plus tax liability you keep. CaregiverAre Medicaid Waiver Payments Taxable?Are Medicaid waiver payments taxable? Usually not, if you live with the person you care for. What IRS Notice 2014-7 excludes, what it misses, how to report it. CaregiverPersonal Care Agreements: How to Pay a Family Caregiver Without a Medicaid PenaltyA personal care agreement lets a family pay a relative for caregiving without the money counting as a gift under Medicaid's look-back. What to include and why. CaregiverTax Breaks for Family CaregiversSupporting a parent? For 2026 you may get a credit of up to $500, file as head of household, and use a dependent care FSA of up to $7,500. Here are the tests. CaregiverWhen a Caregiver's Employer DiesParent who paid a caregiver died? Year-of-death payroll taxes owed generally go on Schedule H with the final return; an estate paying the aide may owe its own.

Find personalized help setting up legal pay for your parent's caregiver at brevy.com.

The information on Brevy.com is for educational purposes only and is not a substitute for professional legal, financial, or medical advice. Rules vary by state and program and change frequently. Always verify with the relevant agency or a qualified professional. Brevy is not a law firm, financial advisor, or healthcare provider.

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Expert eldercare guidance from Brevy's team of healthcare professionals and researchers.