Heath-aide employment taxes

Discussion in 'General Discussion' started by jayencee, Jan 31, 2015.

  1. jayencee

    jayencee Newbie

    I am a Vietnam era vet recently approved for A & A with a question on employee taxes. I currently have two part time aides helping me. As their employer I must pay the employer's share of SSA, Medicare, FUCA, workman's comp, etc. which adds roughly 20% to their gross pay. Is this a VA medical deduction? If so, do I claim reimbursement when I pay Schedule H taxes in April or estimate them now? What if my care needs change? How do I report this? I like the forum and have found useful information here.
  2. vetadmin

    vetadmin Administrator Staff Member


    Have to say you pose a question that we have not dealt with. I don't know of anyone who has paid as an "employer" of aides. Generally they are responsible for reporting their income on their taxes, and will have to hope a couple of our experts here can chime in on this.
  3. jayencee

    jayencee Newbie

    It is my belief if you pay a health aide more than $1000 a quarter or more than $1900 annually you must report this to the IRS under the "Nanny Tax" law. I hope I'm wrong, but when the VA did away with annual EVR repeporting they now use SSA and IRS info to verify continued eligibility.
  4. VA Legal Team

    VA Legal Team Full Member

    I don't believe it is an unreimbursed medical expense; but I'm not certain. I've never encountered that as an UME in Part 3 of Title 38 or WARMS (tells VA employees how to do their job).

    However, let me ask you this: do you receive all or some of those taxes back via refund? If yes, then they aren't unreimbursed. If you do receive a refund, remember that income tax refunds are not counted as income by the VA.
  5. jayencee

    jayencee Newbie

    VA Legal Team - Thanks for your reply. I have two excellent part time nursing aides which I pay with my A&A benefits. All last year I simply cut them a check, intending to issue them 1099's at the end of the year, and called it good.

    Regretfully, I discovered under IRS rules, they are considered employees. As such I now must withhold SS and Medicare taxes amounting to 6.2% and 1.45% of their gross pay (7.65%). I am also obligated to match this with my own (7.65%) contribution. In addition to other costs such as unemployment insurance, workman's comp insurance, etc. the "burden" on my benefit is in the 15-20% range. Yikes!

    Am I missing something here? Aren't the costs to employ my aides (employer's contribution to SSA, medicare, unemployment insurance, etc.) reimbursable?

    I receive Social Security only as income.

  6. VA Legal Team

    VA Legal Team Full Member

    I hear what you're saying; like I said, I'm not 100 percent sure. You can always try to count those expenses and see what the VA says.

    My point was that if you receive a refund from the IRS, then the money you were obligated to repay is actually not unreimbursed. If you receive that money back, then it is a reimbursed expense, and thus couldn't be counted.
  7. jayencee

    jayencee Newbie

    VA Legal Team - Thanks for your reply. I agree with your assessment of the refund scenario. How do I submit these expenses to VA? Do I use an Improved EVR or some other form? Is there an A&A info number to call? Sorry for all the questions but this process is all new to me.
  8. OhioVSO

    OhioVSO Newbie


    The answer to your question lies in M21-1MR, Part V, Subpart i, Chapter 3, Section D, but I don't think it is clear.

    It states, "If an in-home attendant is caring for a disabled person who has been rated housebound or in need of A&A by the Department of Veterans Affairs (VA) - Then allow for a deduction for the wages of the in-home attendant, even if the attendant is not a licensed health professional."

    It clearly states that "wages" are deductible medical expenses. The problem is that "wages" aren't, for these purposes, defined in the M21-1MR.

    My advice; if I were you I would fill out a VA Form 21P-8416 (detailing my UMEs, showing actual caregiver cost, since my previous reporting), an Attendant Affidavit (copy attached) reporting the actual amount (the amount of their paychecks) received by my caregivers and a VA Form 21-4138 clarifying the actual cost for caregiver services (a breakdown that details the amount of their paychecks and the cost that you, as an employer are responsible for).

    This will force them to make a decision on as to what "wages" are, for these purposes. You will have met your responsibility to detail your UMEs.

    I assume that they will fall back on the definition of "wages", as found in the USC. I'm certainly not an expert on the USC, but I believe the employer responsibility isn't included.

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