Everyone loves a clean home. However, when your busy life revolves around raising kids, working a full-time job and maybe even caring for an older loved one or a pet, the days of having a spotless living room or kitchen can be few and far between. It’s no wonder then why the idea of hiring a housekeeper is an ideal scenario for many families. As you figure out your house cleaning budget, don’t forget that taxes could be part of the equation.
Depending on the type of worker that comes to your home will depend on whether you need to manage taxes for them. Here are three common scenarios for hiring a housekeeper and the correct way to approach paying them.
1. You call a housekeeping service to come to your home on a regular basis.
You will probably work with the company to go over the details of how you want your home cleaned and can start and stop service at any time. Each time you need your home cleaned, the company will send over the workers that are available at the time and date you requested. They will bring over their own cleaning supplies and you’ll pay them when the work is complete.
What are my tax responsibilities? In this scenario, taxes do not factor into the equation because you’re enlisting the service of a business.
2. You hire someone to come to your home on weekdays to clean and handle other household chores.
If you’re in the position where you need daily help cleaning certain parts of your home, along with things like laundry and dishes, hiring someone to accomplish all these tasks probably means that person is your employee in the eyes of the IRS. The reason is because you’re looking for the same person to come to your home on the schedule you set and perform a specific set of duties each day. Additionally, you’re most likely providing the housekeeper with the supplies in your home that they’ll use to do their job.
What are my tax responsibilities? As an employer, taxes do play a part in managing your new housekeeper if they earn $2,600 or more throughout the year. You’ll be responsible for withholding Social Security and Medicare (FICA) taxes from their pay and paying a matching portion of FICA taxes. After the end of the year, you’ll give your housekeeper a Form W-2 so they can file their personal income tax return.
Learn more about the tax and payroll responsibilities you have as the employer of a housekeeper.
3. You schedule time with a local housekeeper to clean your home every other week.
Perhaps you only need help tidying up your house every now and then. Using references from friends and co-workers, you find someone who cleans homes in your area and book appointments with them when they’re free. They bring their own cleaning supplies and charge you for their services when they’re done for the day. In this case, the housekeeper is probably self-employed running their own business rather than your employee because they are in control of the working relationship they have with you.
What are my tax responsibilities? For tax filing purposes, you can provide your housekeeper with a Form 1099 after the year is over if you paid them a total of at least $600. They’ll accumulate additional 1099 tax forms from the other families they worked for throughout the year to report all their income and expenses to the IRS.
The point of these scenarios is to keep you informed on how taxes can play a role in your hiring decision. No one wants to spend valuable time fixing tax errors, so having the correct information at your disposal before your housekeeper begins working is the easiest way to minimize that risk.