Caregiver 1099s: Avoiding Tax Season Mistakes Registries Make Every Year

Every year, tax season brings questions, confusion, and—too often—mistakes. If you run a home care registry, the 1099 process is one area where small errors can create big problems. Miss a form, forget a detail, or file late, and you could face penalties or trigger an audit.

The good news? It doesn’t have to be that way. If you work with independent caregivers, you just need to understand the basics, stay organized, and know what the IRS expects.

Let’s break it down in plain terms.

What is a 1099-NEC?

The 1099-NEC is the tax form used to report payments made to independent contractors. If you pay a caregiver $600 or more in a calendar year, you (or your payment processor) are expected to issue this form.

But here’s where it gets tricky: Not all registries pay caregivers directly. Some use a third-party service or platform that pays under a different entity. If that’s the case, the responsibility for issuing 1099s may not fall on you.

Still, it’s your job to know what your setup looks like and make sure it’s being handled the right way.

Common Mistakes Registries Make

Let’s be honest: No one wakes up excited about tax forms. But skipping steps can come back to bite you. Here are the biggest slip-ups we see:

Not collecting W-9s: Before you pay a caregiver, you should have a completed W-9 form. This gives you their legal name, address, and tax ID.

Missing the deadline: 1099s must be sent to caregivers and filed with the IRS by January 31. No extensions. No grace period.

Using the wrong form: The 1099-MISC used to be standard. But for independent contractor payments, the IRS now requires 1099-NEC.

Reporting under your business when you shouldn’t: If you’re using a service that pays caregivers on your behalf (like Ally), the 1099 responsibility likely falls to them. Don’t send duplicate forms.

What If You Get It Wrong?

If you forget to file, file late, or send incorrect forms, the IRS can issue fines. These range from $60 to $310 per form, depending on how late you are. And if the IRS believes you willfully ignored the rules, the fine can be much higher.

Aside from the money, there’s also the risk of confusion. Caregivers who get two 1099s for the same income—or none at all—may question your registry’s professionalism or even file a complaint.

What You Should Do Instead

First, make W-9 collection part of your regular process. Every caregiver should fill one out before they ever receive payment.

Second, keep clear records of all payments made. That includes the amount, dates, and who paid—your registry or a third party.

Third, know who’s responsible for issuing the 1099s. If you’re working with a billing partner like Ally, you’re likely off the hook. Ally pays caregivers under its own entity and handles all tax reporting.

(You can read more about that in our Guide to Caregiver Registries and Taxes.)

A Note on Compliance and Classification

Issuing 1099s is about more than just checking a box. It’s also part of proving that your caregivers are truly independent contractors.

The IRS and the DOL may look at your tax forms if they ever question how your registry operates. If you’re paying caregivers directly, classifying them as 1099s, and issuing the right forms, that helps support your position.

(If you’re worried about this topic, you might also want to read: Why Would the Department of Labor Call Me?)

Quick Tips to Stay on Track

• Request W-9s as soon as you start working with a caregiver
• Keep digital records of all caregiver payments
• Mark your calendar for January 31
• If you're unsure who should send the 1099, ask your billing partner now
• Don’t assume the IRS won’t notice

Tax time doesn’t have to be stressful, but it does take preparation. The more consistent your process is, the fewer surprises you’ll face.

Keep It Simple, Keep It Safe

At the end of the day, 1099s are just part of the deal when you work with independent caregivers. Getting them right protects your registry, supports your caregivers, and helps you avoid messy problems down the road.

You don’t need to be a tax expert. You just need to stay clear, consistent, and ready.