paying caregivers with cash/lookback

First of all, there is nothing illegal about paying someone in cash. It is up to them to report the income on their state and federal income tax returns. However, please note that you are legally required to issue all payees a Form 1099 to all individuals that have been paid more than $600 during the calendar year. The returns must be filed with the IRS by the end of February immediately following the year for which the income items or other proceeds are paid. Copies of the returns must be sent to payees, however, by the end of January. The form requires the recipient’s name, address, and social security number. If you fail to report the payments via a required Form 1099, you will be subject to a $250 minimum penalty from the IRS per worker, per year. It appears that these “cash only” employees are asking you to violate federal law unless they give you their legal name, address, and Social Security number (assuming they will receive more than $600 per calendar year from you).

As you can see, there are more issues than simply how it may affect Medicaid eligibility! As far as Medicaid, though, you must