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my folks got a health care worker who signed a letter stating she is an independent contractor. So we have been paying her by the week at a flat rate. yesterday she informed me because they are the only source of her income she is not longer an independent contractor. so wink wink, no one is paying taxes.

First and most importantly, your parents are being cared for by a thief. At the top of your list is to find a new provider ASAP. I'd recommend going through an agency (my parents used Kelly Assisted Living) to get through the crisis phase while they shop. That will give time to learn the rules before independently hiring someone.

Right behind that is don't pay another penny without getting her SSN, which I assume no one ever did, since it's fairly standard in this scenario, which has, I'm sorry to say, no completely innocent players. If she refuses to provide one come back for some info on backup withholding.

The question of employee vs independent contractor is a matter of facts and circumstances, not dealer's choice. Those facts and circumstances are covered in IRS Form SS-8.

On the surface it sounds like she's been an employee from day 1. Your parents' Federal responsibilities are explained in Publication 926. They may also have state responsibilities for unemployment and workers' comp.

Phil
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