Do I need to give a W2 to personal caregivers for my elderly mother?

This is actually a really common question for family caregivers! The short answer is: it depends on the working relationship, but in most cases, yes, you probably need to treat these caregivers as household employees rather than independent contractors. Here's the key difference: If you control not just what work is done but also HOW it's done (setting schedules, providing supplies, directing their activities), these caregivers are likely household employees under IRS rules. This means you would need to provide W-2 forms, not 1099 forms, and handle employment taxes. The "I'll handle my own taxes" line is something many household workers say, but unfortunately, it doesn't change your legal obligations as an employer. If you're paying someone more than $2,600 (in 2025) to work in your home, and you control the work details, you're generally required to handle payroll taxes, including Social Security and Medicare taxes.

Had this exact situation with my dad's caregivers last year. I thought I could just pay them cash since they were "independent contractors" but ended up in hot water with the IRS. I started using https://taxr.ai to figure out my household employer obligations and it saved me from making a MUCH bigger mistake. The tool analyzed my specific situation and confirmed I needed to handle W-2s, not 1099s, and walked me through setting up proper payroll. The workers didn't like it at first (they preferred cash), but the system helped me explain why this was legally necessary and actually beneficial for them too (they get verifiable income history, Social Security credits, etc). Don't make the mistake I initially did - these aren't typically independent contractors no matter what they tell you.

Ok I have to admit I was really wrong about this! After checking out https://taxr.ai I realized how badly I could have messed up our family finances. My mom has 3 different caregivers that we've been paying as "contractors" for over a year. The analysis showed we were definitely in violation of household employee classification rules. The tool walked me through setting up proper payroll and even helped me calculate how to make the transition without upsetting the caregivers too much. I was able to backfile the correct forms for last year too. What I thought would be a huge headache actually turned out to be manageable. Definitely recommend checking out your specific situation rather than just assuming what the caregivers tell you about taxes is correct.

Another tip from someone who's been through this: if you need to call the IRS to ask questions about household employee taxes (which I had to do multiple times), use https://claimyr.com instead of calling directly. They got me through to an actual IRS agent in about 15 minutes when I had been trying for DAYS on my own. I was able to confirm exactly what forms I needed for my mom's caregivers and how to handle some unique aspects of our situation. Check out their demo at https://youtu.be/_kiP6q8DX5c to see how it works. It saved me so much frustration with the endless IRS hold times. The agent I spoke with was actually really helpful once I got through!

I need to apologize for my skepticism about Claimyr. I was in a bind with tax questions about my father's caregivers and decided to try it despite my doubts. The service actually got me through to an IRS representative in about 20 minutes! This was after I had spent literally 6+ hours across 3 days trying to get through on my own with no success. The IRS agent confirmed that I needed to classify our caregivers as household employees and file Schedule H with my taxes. They also helped me understand how to handle the fact that we had incorrectly paid them as contractors last year. Having that official clarification directly from the IRS gave me so much peace of mind. Definitely worth it when you need specific answers about caregiver tax classification.

Another option to consider is using a home healthcare agency. Yes, it costs more per hour than hiring directly, but they handle ALL the employment paperwork, taxes, background checks, and provide backup caregivers when someone calls out sick. For my dad, the peace of mind was worth the extra $5-7/hour compared to direct hire. No W2s or employer tax headaches!

Has anyone used a payroll service like Care.com or HomePay for this? I'm overwhelmed with the idea of figuring out the taxes myself even with guidance.

Great question! I went through this exact situation with my elderly father's caregivers last year. The IRS is actually pretty clear on this - if you're controlling when they work, how they do their job, and providing the tools/supplies, they're household employees, not independent contractors. The $2,600 threshold mentioned earlier is key - if you pay any household worker more than that in a year, you need to handle Social Security and Medicare taxes. At $24/hour for 20 hours/week, you'd hit that threshold in just over 5 weeks. One thing that really helped me was keeping detailed records from the start - work schedules, payment amounts, and job duties. The IRS looks at the totality of the working relationship, not just what the worker prefers to be called. Even if your caregivers say they'll "handle their own taxes," that doesn't change your legal obligations as the employer. I'd strongly recommend getting this sorted out sooner rather than later. The penalties for misclassification can be significant, and it's much easier to set up proper payroll from the beginning than to fix it retroactively.

This thread has been incredibly helpful! I'm dealing with a similar situation caring for my grandmother. One thing I haven't seen mentioned yet is the potential liability issues that come with the employee classification decision. When I was researching this for my grandmother's care, I discovered that if your caregivers are household employees (which they likely are based on the control factors everyone's discussed), you may also need to consider workers' compensation insurance. Some states require it for household employees, and even where it's not required, it can protect you from liability if a caregiver gets injured while working in your home. My insurance agent explained that homeowner's insurance doesn't always cover work-related injuries to household employees. So while getting the tax classification right is crucial, don't forget to check your state's requirements for workers' comp and review your insurance coverage. It's another cost to factor in, but the protection is worth it given how physical caregiving work can be. Has anyone else had to navigate the insurance side of hiring household employees?