Taxes for Home Health Aides — 1099, Mileage, and What You Actually Owe

Your reality

The parts of this topic that hit your line of work differently — and that generic advice skips.

• 1099 income carries self-employment tax

  As an employee, you and your employer split Social Security and Medicare. On self-employment income you generally cover both halves, which is a considerably larger bite than a first-time contractor expects.

• Mileage between clients is treated differently by status

  For self-employed care workers, driving between clients is generally a deductible business expense. The trip from home to your first client and back from the last is generally treated as commuting, which isn't — unless your home qualifies as your principal place of business, in which case those trips can count too. That test is narrower than it sounds and worth putting to a preparer rather than assuming either way. Under current law, W-2 employees generally can't deduct unreimbursed job costs federally at all.

• Credits at these incomes are worth more than deductions

  A credit reduces tax owed directly. At the incomes common in this work, credits tied to earned income, children, and retirement contributions are typically where the real money is — and they're routinely unclaimed on self-prepared returns.

Frequently asked questions

• I got a 1099 and nothing was withheld. What do I owe?+

  Income tax plus self-employment tax on your net profit — income minus genuine business expenses. Because nothing was withheld, it all comes due at filing unless you've been setting money aside or making estimated payments. A preparer can tell you which applies to you.

• Can I deduct the miles I drive between clients?+

  If you're self-employed, driving between client sites is generally deductible. The first trip from home and the last trip back are generally treated as commuting, which isn't — unless your home qualifies as your principal place of business, in which case they can be. Ask a preparer whether you meet that test, because over a year of driving it's real money either way. If you're a W-2 employee, unreimbursed mileage generally isn't federally deductible under current law — ask your agency about reimbursement instead, which is worth more.

• My income is low. Is it even worth filing?+

  Usually yes, and often strongly in your favor. Refundable credits can mean money back even when little or no tax was owed, and you have to file to receive them. Free filing help is widely available at these income levels — worth seeking out rather than paying for preparation.