Yikes. Are you sure Sarah was using your dad’s pity to get some $$$ towards her taxes??? Unless this is her first go around with this company (2025) seems she would know that paying taxes is something that happens yearly!
9 Likes
I’m astonished that a caregiver made so much money that they owe $38k in taxes. I thought the agencies took a big cut of the charges and that caregivers didn’t earn that much.
11 Likes
That’s more than double of my tax burden last year. And our income is quite healthy
I wonder if this includes FICA taxes? I am having trouble getting my mind around that number
9 Likes
If Sarah has worked for more than a year with this agency, she knows the drill. I suspect she is playing on your dad’s sympathies. One can inquire (to the agency) to see why she is dropping down to 3 days a week (see what she told them) - perhaps find out some truth here. Also, about the trustworthiness with other caregivers who can use the debit card for groceries and things – how to have perhaps some kind of a schedule on debit card use days and oversight.
I think your dad’s bookkeeper needs to be aware of this whole situation. It sounds like Sarah has been very close and given a lot of trust.
IDK how well the agency screens individuals, and how many times they still have problems due to clients/patients in their vulnerable and trustworthiness get taken advantage of.
If Sarah has been a long-time caregiver, and the agency has had her as a contractor for a long time, why is this tax liability thing coming up this year?
Yes, and independent contractor does have to pay both ends of FICA - but their pay should compensate for that so their hourly rate (after this tax burden) is correct. Perhaps Sarah’s personal life has shifted for an additional tax burden this year.
After all is sorted out, yes, Sarah should be paying quarterly taxes. Perhaps one can get ‘forgiveness’ for a penalty with a first-time situation.
9 Likes
I know the first year we were retired, we underestimated our tax burden. I was given a one year pass so to speak.
I’ve never paid quarterly taxes so I’m not sure how that works and never been a contracted employee so not familiar with that either
Crazy situation. I thought the advantage of using an agency is that there was no sweat (by client or caregiver) regarding taxes, SS etc. Agree with others - to owe that much taxes one would be making a VERY good income, surprising to have no savings.
3 Likes
I know things are different out there in TX but if this agency assigns the caregivers , tells them what to do and pays them hourly it’s probably not even legal for them to be independent contractors. But whatever. She may or may not owe a penalty for not paying quarterly and even if she does it should be very small since she made more this year than the year before so wouldn’t worry about that. When I was an independent contractor I never paid quarterly - too much trouble - and the few times I owed a penalty it was small enough to more than make up for the time I saved not doing it quarterly. That said paying quarterly is a great way to keep track of what you’ll owe if you’re not disciplined enough to save during the year.
2 Likes
And I agree, $38,000 is an enormous tax burden - she must have done extremely well!
2 Likes
All this sounds fishy to me.
10 Likes
My grandfather married a somewhat wealthy woman after my grandmother passed and she was always giving her fairly long term caretaker significant amounts of money for one crisis after another. Eventually my grandfather asked for my help to see if it was real — ie, her daughter was in the hospital and the woman needed money to pay the medical bills etc — and none of it checked out.
4 Likes
Hmmmm….. $19k is a convenient/fishy number…
AI Overview - For 2026, the federal annual gift tax exclusion is $19,000 per recipient ($38,000 for married couples splitting gifts). This allows individuals to transfer cash or property to others without reporting it to the IRS or paying gift tax. The lifetime exemption also increases to $15 million per individual.
5 Likes
Exactly!
I wonder whether her company knows about this issue.
4 Likes
Idea - Maybe Dad can offer to write a check directly to the IRS for any money due.
Another AI answer - Yes, someone else (such as a friend or family member) can write a check to cover your IRS tax debt, but the IRS must be able to identify whose account the payment belongs to. The most important step is ensuring your information is clearly listed on the check to avoid it being applied to the wrong person.
7 Likes
The $19k number stood out to me immediately, but I’ll give them the benefit of the doubt that Dad knows that $19k is how to avoid any paper work and so that’s how they settled on that amount. But I wouldn’t bet any money on that.
ETA: I mean, would her company even let its contractors take such large gifts from their clients?
6 Likes
I’m going with the “ugh” side of things. Only from experience. Hoping you fare differently. My aunt had a long time caregiver who I know did take care of her and was so good to her–but in the end was out for every penny for herself. It wasn’t over a long time period fortunately but it wasn’t until my aunt died that we realized how much she may have been taken for. It wasn’t worth fighting or dealing with (mostly because we could afford it) but it did show you couldn’t put blind trust into anyone. It was mostly sad–you want to believe in people and when trust is betrayed it taints everything.
4 Likes
My mom’s caregivers could only accept small gifts, so we gave them small food gifts and brought whomever was watching her when we went out to eat if they wanted to come, including them in the meal. We never gave any of them $$$ and none asked—they were paid by agency.
I think they could have been fired if they sought or kept gifts that were $$$. I think there was a limit of like $25 or something that we could spend on them per the agency. We bent that a bit because each of the 7 of us gave them gifts.
2 Likes
It does include FICA. But yeah, was shocked. She does work a LOT of hours each week. I think the rate is around $32/hour, which is standard in the area.
2 Likes
Yea, but let’s do the math. Assuming the agency gets a chunk of it… let’s say $25/hour x 80hr per week (crazy high, but maybe some are overnighters)…. that’s $2000/week = $100,000 per year. It’s hard to understand that it would add up to $38k/year taxes&FICA (since you said the $19k was about half of what she owed). Hmmm… perhaps it is a multi-year problem?
8 Likes
Hate to keep piling on but the conversation that the caregiver would have to cut back hours because of a tax burden makes no sense.
I guess maybe in the fact that you would be in another tax bracket but you would still be in arrears paying taxes.
On the other hand, having a parent who is not local, I have great empathy for trying to keep everything together. At times, there is only so much you can do. You hope a lot that things will be okay and only have so much time to solve problems that are complicated and difficult.
8 Likes
Agree the math doesn’t math. $38000 in taxes as an independent contractor (including both sides of fica) is probably about $120,000 gross. At $30 an hour that means she’s working 75-80 hours a week year round without breaks or vacation. I don’t think that’s likely - working 15 hour days 5 days per week all year long? Even if she’s working seven days a week that’s still 12 hour days week after week all year long? And that assumes the agency is only taking $2 an hour. If she’s making less the math gets even less likely.
4 Likes