for an agency
If you provide services through an agency, you are probably an employee of that agency.
It will withhold taxes, provide you a W-2 form at the end of the year, and bill clients. The agency will have policies about
paid holidays, sick and vacation leave; it may or may not offer you health insurance. If you want a raise, you bring this
up with the agency, not with the client you help.
Most agencies have policies prohibiting clients from supplementing
salaries or giving gifts to their helpers. This is to protect clients from pressure by their helpers. Make sure you honor
Working directly for clients
If you work directly for clients,
your employer and your client are one and the same. You’ll have to negotiate benefits, health insurance, paid holiday
and sick leave with this employer/client. This dual role can strain your relationship because the person you help is also
the person who may deny your raise and tell you to work on a holiday you’d like to take off.
Are you are
you an employee or independent contractor? This is a big deal to the IRS and determines who is responsible for withholding
money to pay taxes. Generally, people who set their own hours, divide up their work as they see fit and have several clients
are independent contractors. People who work many hours if not full time for one person are probably employees. A house cleaner
who cleans 10-12 homes a week, spending 3-5 hours at each home, is clearly an independent contractor. A home health aide who
works from 9-5 Mon.-Fri. caring for one person is clearly an employee. How many hours of assistance are you providing? How
many other clients do you have? Your employer needs to file IRS Form 1040-H annually ( http://www.irs.gov/pub/irs-pdf/f1040sh.pdf)
You will need to pay estimated quarterly taxes on your earnings using form 1040ES.
For more information go to:
http://www.irs.gov/formspubs/article/0,,id=99247,00.html, schedule H, household employment taxes. Nolo Press, www.nolo.com, provides more information
on this topic.
If you are an employee, your employer (just like an agency) will withhold taxes and give you a W-2
form. If you are an independent contractor, your employer will give you a 1099 form documenting your earnings for the year
but you must take responsibility for paying estimated taxes each quarter. When interviewing, be sure to discuss this topic.
People often pay in-home helpers an hourly rate without giving a thought to the tax implications. They may also not know they
are expected to submit the W-2 or 1099 to the IRS.