Hey there, Smart Ladies!

Simply Fated

I have a question... and I know you guys will give it to me straight. Am I worrying over nothing?

My grandmother lives in an assisted living center. It's not a nursing home, it's more like a hotel that you live in where all the food is paid for and there are activities to participate in.

Due to injuries she now requires an aide to be with her for most of the day, from when she gets up in the morning until just before she goes to bed.
We found a company that gives us aides to use and after going through quite a few we finally found one we love and want to keep on a regular basis. The trouble is, this aide wants to be paid off the books. This way, the company doesn't take a cut and she gets paid in full.
I really like her, but is this even legal? It's not like she's baby sitting for a few hours or a teenager mowing out lawn for 20 bucks a week. She'd be getting several thousand dollars a month. This all sounds really shady to me. Can't she, like, not apply for healthcare? What happens when she files her taxes?
Worse of all, what if something happens to my grandmother? This whole set-up with the aide working off the books means lying to the assisted living center. This all sounds like a terrible idea.

I'm incredibly hesitant, but am I worrying over nothing?

Mrs.B6302007

I wouldn't be comfortable with anyone asking to be paid under the table.

Stackeye210

I don't think you're wrong to be worried.  I would want someone that a company would be responsible for if something happened.  What if she doesn't show up one day and nobody knows?  If she were with the company you would be made aware and a person would be there to step in. 

It just sounds really suspect.  Also, if it's against assisted living policy don't do it.  The last thing you'd want is to not have a place for your grandmother to live.  So while it's great you found someone you like, she sounds like she has other interests, her own.  You'll find someone just as good who does it all legally.  

You need to be able to hold someone accountable for the care she is receiving. 

chelseamb11

I'm willing to bet that the company has somewhere in her contract that, while an employee, she cannot be freelancing, especially off of clients the company found for her.  It sounds sketchy to me.

aragx6

This is illegal and you shouldn't do it -- it's also likely to have tax implications for your grandmother or whomever's finances are involved as well. I'm wondering if she's not authorized to work in the U.S.

chelseamb11

In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/wedding-boards_etiquette_hey-there-smart-ladies?plckFindPostKey=Cat:Wedding BoardsForum:9Discussion:bbf8a311-1d38-4850-afab-aa045427a684Post:1f162f68-1aad-43bf-aff5-6349754cbd6b">Re: Hey there, Smart Ladies!</a>:
[QUOTE]This is illegal and you shouldn't do it -- it's also likely to have tax implications for your grandmother or whomever's finances are involved as well. <strong>I'm wondering if she's not authorized to work in the U.S.
</strong>Posted by aragx6[/QUOTE]

Well if this company recommended her though, my guess is she's already employed by them. 

Maggie0829

Super illegal.  With her being paid under the table she does not have to declare that money on her taxes (hello, tax evasion).

You need to find a new aide because this one could come back to bite you in the butt.

aragx6

In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/wedding-boards_etiquette_hey-there-smart-ladies?plckFindPostKey=Cat:Wedding BoardsForum:9Discussion:bbf8a311-1d38-4850-afab-aa045427a684Post:bb46d986-7cb5-4369-b8f0-27595d92a8ac">Re: Hey there, Smart Ladies!</a>:
[QUOTE]In Response to Re: Hey there, Smart Ladies! : Well if this company recommended her though, my guess is she's already employed by them. 
Posted by chelseamb11[/QUOTE]

You're probably right, in which case she's one of the most unethical people I've heard about in a long time. There's simply no good "excuse" for this other than utter tax evasion -- or maybe she has her wages garnished because of an old bankruptcy or child support issue.

Katelyn89

I was an aide when I was in school for nursing and I can gaurentee you this isn't right. I would have been fired if the nursing home I worked for found out I did this. When I did homecare we were responsible for updating the agency regularly to ensure the client was receiving the appropriate amount of care and were responsible for charting in case something did happen. As a healthcare employee I would not feel comfortable providing care without a union or agency backing me, so the motives of the aide seem off to me. I can see why the aide wants to save money (who doesn't), but I find this sketchy.

Simply Fated

What could the legal ramifications be for me? I mean, I totally get that she's evading taxes and that's really bad, but can I get in legal trouble, too?

TurtlesAllTheWayDown

By paid off the books, does she mean paid in cash, or does she mean paid directly by you, vs. through her company?

If you're just paying her directly, it doesn't have to be tax evasion. However, you'd have to withhold or pay SS taxes and she'd have to claim her income on her own taxes. You'd probably have to have her fill out a 1099 form. You'd probably want to talk to a tax accountant about this. That would be perfectly legal, if a bit more work for you. Whether or not there's some kind of clause in her contract (and whether it would hold up in court) allowing her to do this is another matter.

If she's just working under the table and not claiming it on her taxes as income, that's illegal and you would both get in trouble if caught. It's also a bad idea, since she wouldn't be earning SS on any of that income and that can screw her over in the future.

LiLe422

The only way for you to stay in the clear tax wise is to have her fill out a w9 form and issue her a 1099 at the end of the year. The tax liability is now on her. But it sounds like that's exactly what she's trying to avoid.

egm900

Depends on the set up, but it sounds like a bad idea. Chances are, the company has liability insurance, while I doubt she does. Otherwise, you could set it up that she's responsible for her taxes and healthcare. Does the assisted living center have any requirements for aides? If they do, definitely make sure they are complied with, you don't want to jeopardize her spot at the center.

TurtlesAllTheWayDown

In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/wedding-boards_etiquette_hey-there-smart-ladies?plckFindPostKey=Cat:Wedding%20BoardsForum:9Discussion:bbf8a311-1d38-4850-afab-aa045427a684Post:c6b9982d-d07b-4f79-a677-dc019103ec9c">Re: Hey there, Smart Ladies!</a>:
[QUOTE]What could the legal ramifications be for me? I mean, I totally get that she's evading taxes and that's really bad, but can I get in legal trouble, too?
Posted by Simply Fated[/QUOTE]

Yeah, as an employer, you'd have a tax burden as well. You'd either have to pay those out of pocket or take them as deductions from her check.

If she's an "independent contractor" and not an employee, I don't know what the tax burden would be on you, because I am not a tax attorney or accountant, by far. But definitely check if you want to do this.

Avion22

Also, I would imagine that her professional insurance is coverd by the company.  If you employ her on your own, then she would need to pay for her own insurance (which I'm betting she won't do), so she would essentially not be insured to practice health-care.   This is VERY sketchy.

jemmini6

I think to cover yourself legally, you'd have to hire her as a 1099 employee.  This works for you because it releases you from payroll tax liability, and it will still give her a higher wage than going through a company, but she'd still have to pay her taxes.  (My sister used to work as an aide to a handicapped girl.  Her company billed $50/hr for my sister's time...my sister got paid $9/hr, so I can see where this aide is coming from other than a tax evasion standpoint)

The BIG downfall this way though is that she would have no company insurance backing her work (which is a large part of the fees that companies like this bill out for vs what they pay the employee).  For example, what if she accidentally overdoses your grandma and she dies?  You have zero recourse as far as holding her responsible. 

LiLe422

If she is a independent contractor you just issue her a 1099 at the end of the year.  She is then responsible to pay her federal, state, local and ss (optional) tax on that income. 
Avion is dead on about the insurance.  She would have to carry her own policy for what I just described to be legit. 
Both FI and I both have small businesses.  He helps me A LOT with my business and I pay him cash.  At the end of the year I give him a 1099 for the amount I paid him.  He is responsible to pay taxes on that money.  On his insurance policy there is a rider covering him under my business.  Hope that makes sense!

Simply Fated

@msmerymac ...Both, I guess? I'm supposed to just hand her a check with the amount on it. From what I understand, she's going to quit the company.

I don't know what her reasons are for wanting the money directly from me, but I assumed it was because she wanted to cut out the middle-man. Now I'm seeing there are serioius ramifications involved and not just for her.

Where can I get one of those 1099 forms? Do I have to apply for one or can I buy it at, like, Wal-Mart or someplace? Would an accountant be a logical person to contact?

LiLe422

In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/wedding-boards_etiquette_hey-there-smart-ladies?plckFindPostKey=Cat:Wedding%20BoardsForum:9Discussion:bbf8a311-1d38-4850-afab-aa045427a684Post:056013fe-5b58-41b4-a0cd-75af57e4d426">Re: Hey there, Smart Ladies!</a>:
[QUOTE]@msmerymac ...Both, I guess? I'm supposed to just hand her a check with the amount on it. From what I understand, she's going to quit the company. I don't know what her reasons are for wanting the money directly from me, but I assumed it was because she wanted to cut out the middle-man. Now I'm seeing there are serioius ramifications involved and not just for her. Where can I get one of those 1099 forms? Do I have to apply for one or can I buy it at, like, Wal-Mart or someplace? Would an accountant be a logical person to contact?
Posted by Simply Fated[/QUOTE]

If you are considering doing this, yes, hire an accountant.  A 1099 form can be downloaded directly from the irs website for free.

OliveOilsMom

I was a temp (only a secretary) but I actually saw the amount of money the temp agency charged my current job once compared to what the agency paid me.  I think the agency charge 2 1/2 times what my hourly rate was.  That is probably her thinking, in that she can make more money by working directly with the client.  Also, some temp agencies charge a huge fee to anyone who wants to permanetly hire one of their temps. So if the agency were to find out this woman was working with you privately, they may come after you to pay this fee.

If this were a job that did not depend on someone's health, I would probably just go the 1099 route at the end of the year.  But since this has to do with your grandmother's health - I would keep it with the agency.  It sucks that you found someone you like, but you need to have insurance for grandma.  The assisted living facility has insurance in case of an accident and so should any other health professional, whether its a personal policy or through their company. 

If you decide to pay this woman under the table, I would ask her for a copy of any insurance policy she has in case of an accident with your grandmother.  But in the long run, it would probably just be easier to stick with a person through the agency.

lauralaur

Whether or not she can be considered an "independent contractor" has to do with the degree of control that you have over her employment. If she works for you 40 hours per week every week, has to clear her vacation schedule with you (as in, not "hey just so you know I'll be gone X week," but rather "hey can I take next week?"), etc., then the IRS would likely consider her an employee, not an independent contractor. However, if she has multiple clients then she would likely be considered an independent contractor. 1099s are only required for payments made as a part of your trade or business. The instructions explicitly say that personal payments are not reportable. I assume you do not earn a living caring for your grandmother, so I do not think you would need to issue a 1099. If you think it about it, you don't issue a 1099 when you have your patio redone, do you? I think it can be done legally though I do suggest consulting a CPA first.

But, overall, my gut says to stay away from this one.

bonge

If she wants to be paid without the company she can file as an independant contractor but i definately would not pay her under the table. you guys have to fill the info out on your taxes & do not want to be caught lieing. How can you explain all the money gone?

Hire an accountant if you want to go that way & also a lawyer for the paperwork.

Simply Fated

In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/wedding-boards_etiquette_hey-there-smart-ladies?plckFindPostKey=Cat:Wedding%20BoardsForum:9Discussion:bbf8a311-1d38-4850-afab-aa045427a684Post:2d9da279-a986-4f4a-82a6-ad1d10c59248">Re: Hey there, Smart Ladies!</a>:
[QUOTE]If she wants to be paid without the company she can file as an independant contractor but i definately would not pay her under the table. you guys have to fill the info out on your taxes & do not want to be caught lieing. <strong>How can you explain all the money gone?</strong> Hire an accountant if you want to go that way & also a lawyer for the paperwork.
Posted by bonge[/QUOTE]
I thought of that, too, and my grandmother suggested that we say it was a "gift" to someone. That was actually when it hit me how shady this whole thing really sounded and came here to get some sound (and unbiased) advice from you guys.