Why You Need Home Care Payroll Services

The need for home health aides has been growing in the United States long before the pandemic and with that comes the need for home care payroll services. While some home health aides work with an agency to connect with clients, many households hire the aides directly. It is important to know how to establish a payroll for home health aides since there is often confusion about how the IRS classifies their work. We cover what a home health aide is, how to accurately pay them, and why a payroll software is a useful tool.

 

 

What Is a Home Health Aide?

A home health aide is a trained paraprofessional who provides assistance to a care recipient. They can help with activities such as bathing or eating and can monitor a patient’s health. Sometimes an aide lives full-time with the care recipient, and other times they work scheduled shifts, depending on the needs of the client.

As mentioned earlier, you can hire a home health aide either through an agency or independently. An aide agency handles the payroll, taxes, and insurance responsibilities of an employer. If you do not hire through an agency, you must take care of the taxes. Home health aides are rarely independent contractors, but they do exist. If your aide is a true contractor, they pay their own Self-Employment tax.

 

How To Set Up Home Care Payroll Services

Because most health aides are considered employees, not contractors, you will need to have home care payroll services to process payment and taxes for the aide. A health aide becomes a household employee whose income is subject to employment taxes. There are exceptions to this classification if the aide is your parent, your spouse, your child (if under 21 years old), or an employee under the age of 18.

To get the payroll started for the health aide, you and the employee must fill out an I-9 employment eligibility form. Once you complete this step, the payroll begins. It is important to keep accurate records of each paycheck to the aide as well as the taxes you withhold. These taxes fall under the name nanny tax and can be handled with a nanny payroll software. The IRS has a complete guide to these taxes, but the tax is to cover Social Security, Medicare, and federal and state taxes.

As an employer, you maintain the payroll and provide a report of annual wages and tax withholdings to the employee when tax season arrives.

 

AMS Payroll Software Solutions

Home care payroll services can get overwhelming if you do not have a quality software to rely on. The IRS has penalties if anything is incorrect or late in completing accurate payroll for your household employees. AMS can help you manage payroll with our Payroll Software.

 

 

The software calculates taxes and is compatible with direct deposit or physical paychecks. Additionally, the system allows you to export data to the W2/1099 Filer when you need to file year-end taxes. Give our software a try with a free demo and see how a payroll software can help you manage your household employee’s taxes.

Software Solutions from AMS

Our W-2 and 1099 Forms Filer is our only required platform. From there, users pick the services they need. Choose from the tools below to build out your customized accounting software.