My FIL will be receiving home care from a very good caregiver that states she has her own business. What would she need to have to verify that she is legit with the IRS? We want to make sure that my FIL is hiring someone that is deemed legitimate so that the IRS doesn't come after him.
Every agency must be certified...get that.
Anybody can be a "caregiver"---a friend, a neighbor, family member. They can be employed as an independent contractor, a 1099 employee. They don't need a "business". What needs to be done is the caregiver must submit an invoice for their services on a weekly or bi-weekly basis to provide proof that they were paid for their services & not just given a monetary gift. The best way to pay a caregiver is with a check so there is a record of the payments, and write in the memo area "Weekly pay for [period of time]". A 1099 can be supplied to them for the amount of pay they received in one year by the person they took care of---it is not very difficult & can be done online. However the caregiver handles the income taxes is their own business--as long as they receive a 1099 for tax purposes that proves they received payment in exchange for services. But, this is more for keeping a record of the money your father used for his own care if he ever needs to go on Medicaid & they do their 5 year look-back. Medicaid wants to see that the money he spent on home care was legitimate and not a monetary "gift". The IRS isn't going to come after him as long as he does what he needs to do to document the payments.
I know plenty of elderly people that have live-in caregivers, and the caregivers don't work for an agency. They are independent contractors & get paid directly. As long as there is a record of the payments, you're fine.