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Home Health Agencies: Year-End Payroll Checklist (2026)
Year-end payroll for home health agencies is W-2s and any 1099-NEC to employees and contractors by January 31, the fourth-quarter 941 and annual 940, and the home health agency items that decide which boxes are right: IRS Notice 2014-7 Q&A (Q11, Q16. BEG: $45 per employee per month inside the payroll software you already use, live in 3 to 5 days.
Home health agency items that shape the W-2 and 1099s
Medicaid waiver payments for care of an eligible individual who lives in the caregiver's own home are excludable from federal income tax under Notice 2014-7, so no income tax is withheld, but an agency that employs the caregiver must still withhold and pay Social Security and Medicare taxes. Excluded amounts go on Form W-2 box 12 with code II rather than box 1.
An agency may rely on a caregiver's written statement signed under penalties of perjury that the care recipient lives in the caregiver's home under the plan of care, and should not file Form 1099-NEC for payments it knows are excludable. Payments from the care recipient's private funds are not excludable.
The January calendar
W-2s and W-3 to the SSA and copies to employees by January 31; 1099-NEC for each contractor paid $2,000 or more in the year, the threshold for tax years after 2025, by the same date; Form 940 and the fourth-quarter 941 by January 31 as well, with a 10-day extension where all deposits were on time. Ten or more information returns of any kind, counted together, must be filed electronically. For home health agencies the reconciliation that matters is that the pay codes for visit-based aide pay, travel time reimbursement and Medicaid billing vs payroll landed in the right W-2 boxes for every employee.
The rules behind this page, with sources
General information, not legal advice. Every rule below was read on the agency page linked next to it.
- Medicaid waiver payments for care of an eligible individual who lives in the caregiver's own home are excludable from federal income tax under Notice 2014-7, so no income tax is withheld, but an agency that employs the caregiver must still withhold and pay Social Security and Medicare taxes. Excluded amounts go on Form W-2 box 12 with code II rather than box 1. [IRS Notice 2014-7 Q&A (Q11, Q16, Q18)]
- An agency may rely on a caregiver's written statement signed under penalties of perjury that the care recipient lives in the caregiver's home under the plan of care, and should not file Form 1099-NEC for payments it knows are excludable. Payments from the care recipient's private funds are not excludable. [IRS Notice 2014-7 Q&A (Q7, Q15, Q20)]
Read the full guide to how to handle year-end payroll and W-2s, and the rest of the home health agency payroll library.
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Frequently Asked Questions
Year-end for home health agencies: IRS Notice 2014-7 Q&A (Q11, Q16, Q18)
Medicaid waiver payments for care of an eligible individual who lives in the caregiver's own home are excludable from federal income tax under Notice 2014-7, so no income tax is withheld, but an agency that employs the caregiver must still withhold and pay Social Security and Medicare taxes. Excluded amounts go on Form W-2 box 12 with code II rather than box 1.
Year-end for home health agencies: IRS Notice 2014-7 Q&A (Q7, Q15, Q20)
An agency may rely on a caregiver's written statement signed under penalties of perjury that the care recipient lives in the caregiver's home under the plan of care, and should not file Form 1099-NEC for payments it knows are excludable. Payments from the care recipient's private funds are not excludable.
When are W-2s and 1099s due for a home health agency?
January 31 for both, to the recipient and to the SSA or IRS. The 1099-NEC threshold is $2,000 for tax years after 2025, and 10 or more information returns of any type must be e-filed.
What does managed payroll cost for a home health agency?
$45 per employee per month, all-inclusive, inside the payroll software you already use, with no monthly minimum. Visit-based aide pay, travel time reimbursement and Medicaid billing vs payroll are configured at setup, not billed as add-ons.
Related Resources
Anthony leads payroll solutions at Business Executive Group, a national managed payroll firm serving businesses across industries including Home Health Agencies. BEG manages payroll at $45 PEPM, all-inclusive, with deep expertise in compliance, multi-state filing, and industry-specific payroll requirements. Get instant pricing at beghr.com.
Authoritative source: IRS: Understanding Employment Taxes
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