Updated August 6, 2026. Quick answer: if you pay someone to care for a parent in the home, they are almost certainly a household employee, not a contractor — and the 1099 you were about to issue is the mistake. For 2026 the threshold is $3,000 in cash wages to any one household employee, and there is a separate $1,000 in a calendar quarter trigger for unemployment tax. The exclusions for family members are where this gets genuinely surprising.
The two thresholds
Social Security and Medicare (FICA). The IRS: “If you pay cash wages of $3,000 or more for 2026 (this threshold can change from year to year) to any one household employee, you generally must withhold 6.2% for Social Security tax and 1.45% for Medicare tax (for a total of 7.65%) from all cash wages you pay to that employee” — and you pay a matching 7.65% yourself.
Note all cash wages, not just the excess. Cross the threshold and the tax applies from the first dollar.
Federal unemployment (FUTA). “If you paid cash wages to household employees totaling more than $1,000 in any calendar quarter during the calendar year or the prior year, you generally must pay federal unemployment tax (FUTA) tax on the first $7,000 of cash wages you pay to each household employee.” This one is paid entirely by the employer — “Don’t withhold the FUTA tax from your employee’s wages.”
A quarter is thirteen weeks. At $80 a week you clear $1,000 in a quarter without noticing.
The family exclusions, and which way they run
This is the part that decides most caregiver arrangements, and almost nobody gets it right from memory. The IRS says do not withhold or pay Social Security and Medicare taxes on wages you pay to: “Your spouse, Your child under the age of 21, Your parent, unless an exception is met, or An employee who is under age 18 at any time during the year” (unless household work is that employee’s principal occupation).
Now apply it to a real family. If the parent receiving care is the employer and pays their own adult child to provide it, that child is over 21 and not the employer’s parent — the exclusions do not apply and FICA is owed. Run it the other way — an adult child employing their own parent — and the parent exclusion applies unless an exception is met. The same two people, the same work, and the answer flips depending on whose money it is.
Which is why the first question is not “what form” but “who is the employer”, and that is usually the person whose money pays the wage — often the parent, acting through whatever access arrangement the family set up.
Why a 1099 is the wrong instrument
Issuing a 1099 recharacterises a household employee as an independent contractor, and it is usually wrong on the facts: you set the hours, the place and the manner of the work. The consequences land on both sides. The caregiver picks up self-employment tax at 15.3% instead of the employee’s 7.65%. The family loses the paper trail that makes the arrangement defensible. And the record you actually needed later — W-2 wages, taxes paid, an arm’s-length arrangement — is the record that makes a caregiver agreement stand up when Medicaid looks back at the transfers. The agreement page owns that story, and it is the reason to do this properly rather than cheaply.
Household employment taxes are reported on Schedule H with your own Form 1040, not on a business return, and you will need an EIN. The IRS also warns that you may owe an estimated-tax underpayment penalty if you wait until filing to pay them.
What to do, in order
Decide who the employer is before any money moves — it drives every other answer on this page.
Get an EIN if the thresholds will be crossed. It is free and immediate.
Withhold from the first dollar once you expect to cross $3,000, rather than trying to reconstruct it in January.
Put the arrangement in writing — rate, hours, duties — especially where the caregiver is family: the caregiver agreement.
Check whether the payer can also claim the care credit, which has its own unrelated tests: the dependent care credit for elder care.
Sources
All quotations from IRS Topic no. 756, Employment taxes for household employees (irs.gov), page last reviewed 22 June 2026, read 2026-08-06; Publication 926 is the fuller treatment. The $3,000 FICA threshold is stated by the IRS as a figure that “can change from year to year” and is registered here as a volatile figure for exactly that reason. See methodology and corrections. General information, not tax advice; no affiliate links, nothing sold.
If instead you are paying someone to help in a business rather than in a home, the test and the form are different: contractor or employee, and the 1099-NEC that follows.
A separate route worth checking first: if the person providing the care is employed, their own state may pay them to take the leave — though Maryland’s programme is enacted and not yet paying, and New Hampshire’s is voluntary.