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Thread: Keeping track of PCA payments for tax purposes

  1. #1
    Junior Member
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    Nov 2014
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    SF Bay Area, CA
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    Keeping track of PCA payments for tax purposes

    Those of you who privately pay your PCAs, how do you keep track of your payments for when it comes to tax time? This will be my first year privately paying, and right now I just have them sign a paper saying how much I paid them and how many hours they worked. I'm curious how everyone else does it.

  2. #2
    Technically you should be withholding and paying into Social Security, Fed and State taxes, and Workers Comp. California has a new law about independent contractors and most PCA's don't qualify. Best to hire a bookkeeper familiar with CA payroll regulations to be above board on this.

    (KLD)
    The SCI-Nurses are advanced practice nurses specializing in SCI/D care. They are available to answer questions, provide education, and make suggestions which you should always discuss with your physician/primary health care provider before implementing. Medical diagnosis is not provided, nor do the SCI-Nurses provide nursing or medical care through their responses on the CareCure forums.

  3. #3
    If they are off the books do not leave any paper trail in terms of checks, even if made out to cash. If they are on the books and you just have one employee you can easily set up some Excel spreadsheets, provided you are decent at Excel. You can easily use any inexpensive home-based business/payroll software as well. For on the books, you will need to get a federal tax ID number, a state tax ID number, a Worker's Comp. policy, a disability policy, and pay unemployment taxes, as well as any local taxes. Household employers typically use a schedule H for the once a year annual payment of household employee federal and Medicare taxes, as opposed to paying quarterly. You will also need to set up an account with the IRS for the annual completion of online W-2 and W3 forms. I pay my state income, as well as unemployment taxes quarterly through an account set up online with my state.

    It can all seem a bit daunting at first, but once you have it set up it doesn't take too much time. Be sure to collect the proper forms from the employee for the number of deductions be sure to correctly calculate the correct deductions for federal and state, as well as local and then be clear to the employee the gross pay, the specific deductions, and the net pay.

    If I had to do more than one employee this way I would use accounting software, such as QuickBooks, etc., but I presently have been using Excel with no problem for over 15 years with two or three spreadsheets.

    Just be careful and always crosscheck your amounts to make sure everything is staying in order.

  4. #4
    Junior Member
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    SF Bay Area, CA
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    Thanks guys. I'm reading into this more and it looks like PCAs are classified as household employees and I need to file a Schedule H. Do you guys have recommendations for payroll services that handle this stuff? It looks like not all of them do Schedule H. Also it looks like Pub. 502 says employment taxes I pay are deductible which is a relief.

  5. #5
    The current year Schedule H is downloadable from the IRS towards the end of that year. It only requires a couple of pieces of data and one can fill it in on the PDF and print it out. It then goes to your accountant or whoever does your taxes to be included with it.

    More complicated is keeping track of the data throughout the year than it is completing the form. Provided you do that, filling in the schedule H is straightforward.

    Employee salary and associated costs, such as employer FICA, Worker's Comp., etc. are all tax deductible.

    Schedule H is used when considering whether you owe any money or will get a refund for that year.

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