Don’t Leave Money On The Table: Pay Care Legally

Kyla Dewar

Mon Apr 22 2019

If you've ever needed care for your child, an ageing parent, or just a pair of extra hands around the house, hiring help is likely an option you've considered. Without the time or energy to dedicate to these tasks, hiring a caregiver becomes the go-to option for many families.

However, if you do choose to hire a caregiver, remember to keep in mind that from the moment you bring someone into your home, you become an employer. And like any employer, you must abide by specific rules for paying employees, to ensure you are compliant with both labour and tax laws.

Legal Pay Benefits You

Though it may seem easier to pay "under the table," by writing a check, paying in cash, or sending an e-transfer, there are cons for both you, and your caregiver, that you should be aware of.

These cons are especially evident when employing care for your child. If your child's caregiver is only part-time, and you don't process their payroll and taxes properly, you are unable to use the costs towards child tax credits at the end of the year. Additionally, your caregiver will not have the opportunity to claim the money you've paid them as legal income, which skews their taxes as well.

If you want to make the most of your tax returns, following the steps for legal pay can go a long way in providing deductions, tax breaks, and more. Paying caregivers the right way means that all of the money you pay to employ them is claimable on your taxes as well as theirs, and helps ensure no cash is left on the table when tax season comes around.

Beyond Tax Credits

Legal pay means that caregivers are treated like all other working professionals. It means safe, dignified, and trustworthy employment for the people who go above and beyond for everyone and everything you care most about.

When life gets busy, caregivers do the necessary and challenging work of taking care of children, parents, and households. Just because they don't go into an office every day doesn't mean that their work is any less valuable. There is little work more critical than that of a caregiver.

Another reason to pay your caregiver legally is that it provides them with the same benefits other working professionals have. By ensuring they have a claimable income, caregivers can qualify for unemployment insurance and can build a credit history to apply for credit cards, loans, or a mortgage when the time is right for them.

Do What's Right For Both You and Your Care

Legal pay protects both you and your caregiver from risk and serves to strengthen trust in the relationship. It offers the opportunity for caregivers to work with dignity, enabling their work to contribute to building their future, and also ensures that your family can take advantage of all applicable tax benefits. Further, by using a payroll service to pay your caregiver, you reduce the chance of a government audit and any fines that may be associated with tax fraud. It provides peace of mind for the caregiver too.

Legal pay is the right choice. Choose HeartPayroll or Nanny Lane Payroll.