people don't realize they have to pay payroll taxes on individual housecleaners

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We've never done so, and it never occurred to me that we were supposed to. She has her own business, whether she's set up as an LLC or is just self-employed I don't know, and works for 8 or 9 different employers at any given time. Other than via DCUM I never before have heard that individuals who offer these kinds of services wouldn't do their own taxes.

If she has her own business and is set up as an independent contractor or separate business then you may not need to pay.

This.

Clearly, a cleaning lady with 20+ clients is not our personal employee - we do not dictate her workdays. At most, technically, she should receive 1099s from her clients, but certainly not W-2s involving tax withholding.

It doesn't matter how many people she works for. If she is not incorporated or working for a company, you have to pay ss and unemployment.

[Anonymous]

Went to IRS Pub 926 and it still doesn't clarify -- At first it says that individuals whose work you control are your employees like care providers, house cleaners and lawn services. But then it says...

"Workers who are not your employees. If only the worker can control how the work is done, the worker is not your employee but is self-employed. A self-employed worker usually provides his or her own tools and offers services to the general public in an independent business. A worker who performs child care services for you in his or her home generally is not your employee. If an agency provides the worker and controls what work is done and how it is done, the worker is not your employee.
Example. You made an agreement with John Peters to care for your lawn. John runs a lawn care business and offers his services to the general public. He provides his own tools and supplies, and he hires and pays any helpers he needs. Neither John nor his helpers are your household employees."

[Anonymous]

Anonymous wrote:Went to IRS Pub 926 and it still doesn't clarify -- At first it says that individuals whose work you control are your employees like care providers, house cleaners and lawn services. But then it says...

"Workers who are not your employees. If only the worker can control how the work is done, the worker is not your employee but is self-employed. A self-employed worker usually provides his or her own tools and offers services to the general public in an independent business. A worker who performs child care services for you in his or her home generally is not your employee. If an agency provides the worker and controls what work is done and how it is done, the worker is not your employee.
Example. You made an agreement with John Peters to care for your lawn. John runs a lawn care business and offers his services to the general public. He provides his own tools and supplies, and he hires and pays any helpers he needs. Neither John nor his helpers are your household employees."

Yes, we recently hired a family cleaning service (three sisters, 2 of the 3 come once/month, but not the same 2 every time). They bring their own supplies. We only dictate which rooms are to be cleaned. They have a list of services which they provide, which is the same service they provide to other families. We have made no changes to their "standard" service. We pay them a fixed price per visit and consider them to be self-employed as the description in IRS pub 926 states (yes, we consulted that before we hired them).

[Anonymous]

Anonymous wrote:

Anonymous wrote:This is why many people have housekeepers come every other week.

I don't think that makes a difference. It's not the frequency; it's how much you pay them in a given year. So if it lowers the total amount spent to under the $1800 threshold, then okay. But otherwise, you still have to pay the taxes.

Yeah, I thought we weren't having her come often enough to have to pay taxes but I realized recently that we are paying her more than the threshold - so I appreciate being educated about this.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This is why many people have housekeepers come every other week.

I don't think that makes a difference. It's not the frequency; it's how much you pay them in a given year. So if it lowers the total amount spent to under the $1800 threshold, then okay. But otherwise, you still have to pay the taxes.

Yeah, I thought we weren't having her come often enough to have to pay taxes but I realized recently that we are paying her more than the threshold - so I appreciate being educated about this.

I think a lot of people make that mistake, the housecleaners as well. It is a widespread problem. And I have a feeling the IRS is going to start coming down harder on that kind of thing. It's also a problem with certain low-income benefits. There's a lot of under-the-table paying going on, and it enables people to qualify for benefits they might not otherwise qualify for.

The problem is that you're complicit as well.

The best thing to do is ask the individual hard questions about whether she/he is incorporated. It's always always a good idea to ask they have insurance. That's another thing people don't realize -- liability for people working in your house.

[Anonymous]

My housekeeper comes with a crew and pays them from what I pay each time. I figure she's their boss and can pay them how she wants. I dont' get why I would have to take out taxes. She's a contractor as far as I am concerned.

[Anonymous]

Low income people often DO know that they have leverage over employers if they are paid under the table. I'm the PP from the previous thread whose friend got taken the cleaners when her fired housekeeper filed for unemployment. It was clear the housecleaner knew exactly how to exact revenge for the firing. It wouldn't be out of the relm of possibility in this area for a disgruntled, under the table employee to resort to blackmail if a relationship went sour.

After watching what my friend went through, I would never ever ever pay someone under the table. Not worth it!!!!!

[Anonymous]

Anonymous wrote:Our housekeeper is self-employed. She cleans at least a dozen other houses. There are online questionaires you can fill out to find out if you have to pay taxes.

If you are the sole employer, then you may be on the hook.

Our cleaning lady (housekeeper does not seem to fit in our case) comes every other week and I assume she counts as self-employed. She works for at least 10-15 families and usually has one other woman working with her. In terms of what we pay her, we are over the annual maximum as far as taxes would be concerned. She used to have me make the checks out to her "company name" but now asks that they be made out to her, personally. So, I am not sure if we have a tax issue or not. Ironically , I have asked several accountants about this, including our own, they all laugh and say not to worry about it unless DH or I have plans to run for public office! Just asked again last week as we are preparing tax information for our accountant.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Our housekeeper is self-employed. She cleans at least a dozen other houses. There are online questionaires you can fill out to find out if you have to pay taxes.

If you are the sole employer, then you may be on the hook.

Our cleaning lady (housekeeper does not seem to fit in our case) comes every other week and I assume she counts as self-employed. She works for at least 10-15 families and usually has one other woman working with her. In terms of what we pay her, we are over the annual maximum as far as taxes would be concerned. She used to have me make the checks out to her "company name" but now asks that they be made out to her, personally. So, I am not sure if we have a tax issue or not. Ironically , I have asked several accountants about this, including our own, they all laugh and say not to worry about it unless DH or I have plans to run for public office! Just asked again last week as we are preparing tax information for our accountant.

Well, I would say you have an unethical accountant. Seriously.

The problem is, it's not just public officials who can get caught. All it takes is a disgruntled cleaning lady (some kind of dispute arises) or even a conflict with a neighbor or relative, and you could face a lot of grief.

I used to work as a fitness instructor. For a while, I considered myself an independent contractor. I worked for several different fitness clubs. Well, the IRS started to do audits of fitness clubs and determined that the fitness instructors were employees, not contractors. There were a bunch of fines. Basically, the owner of one of the clubs said that the IRS is trying to squeeze money out of every place it can. And so areas like "independent contractors" are coming under a new kind of scrutiny.

I imagine with the heightened attention to both immigration and taxes, this is an area that is going to get more scrutiny. You probably won't be on the radar, especially if you're paying under the table, but if someone tips off the IRS, it's definitely something they'd come after, even though it may seem like small potatoes to you.

It pays to do due diligence and ask the person what the nature of her company is. I would also get a new accountant.

[Anonymous]

Anonymous wrote:Low income people often DO know that they have leverage over employers if they are paid under the table. I'm the PP from the previous thread whose friend got taken the cleaners when her fired housekeeper filed for unemployment. It was clear the housecleaner knew exactly how to exact revenge for the firing. It wouldn't be out of the relm of possibility in this area for a disgruntled, under the table employee to resort to blackmail if a relationship went sour.

After watching what my friend went through, I would never ever ever pay someone under the table. Not worth it!!!!!

I second that last part. I would also never let someone work in my house until after I have established (a) if they are an LLC/company and (b) if they are bonded and insured. You set yourself for a lot of risk and liability.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Low income people often DO know that they have leverage over employers if they are paid under the table. I'm the PP from the previous thread whose friend got taken the cleaners when her fired housekeeper filed for unemployment. It was clear the housecleaner knew exactly how to exact revenge for the firing. It wouldn't be out of the relm of possibility in this area for a disgruntled, under the table employee to resort to blackmail if a relationship went sour.

After watching what my friend went through, I would never ever ever pay someone under the table. Not worth it!!!!!

I second that last part. I would also never let someone work in my house until after I have established (a) if they are an LLC/company and (b) if they are bonded and insured. You set yourself for a lot of risk and liability.

I will also add that I have a neighbor that wants to let her long-term (10+ years) bi-weekly housekeeper to because the quality has gone waaaaay down despite several attempts to communicate improvement. She alluded to the fact that she is worried to let her go because of the fines she would face for not paying taxes and unemployment. It would not be a pretty situation for sure. The housekeeper may very well know she has job security because of this and has no incentive to do a good job.

The fines for the employers are huge. The fines for the employee that hasn't paid taxes are much smaller and are often waived at the end of day. People, why would you put yourself in this situation to save a few $$$??? Hire a service or hire legally - it's really not that hard. Just read the IRS publication for household employers!!!

[Anonymous]

Anonymous wrote:

Anonymous wrote:Low income people often DO know that they have leverage over employers if they are paid under the table. I'm the PP from the previous thread whose friend got taken the cleaners when her fired housekeeper filed for unemployment. It was clear the housecleaner knew exactly how to exact revenge for the firing. It wouldn't be out of the relm of possibility in this area for a disgruntled, under the table employee to resort to blackmail if a relationship went sour.

After watching what my friend went through, I would never ever ever pay someone under the table. Not worth it!!!!!

I second that last part. I would also never let someone work in my house until after I have established (a) if they are an LLC/company and (b) if they are bonded and insured. You set yourself for a lot of risk and liability.

What nonsense are you talking about? There 's nothing that I see in IRS law about an IC having to be an LLC.
.

[Anonymous]

We pay $75 a week but 3 people come, so technically, we pay each person $25 a week and that only totals $1300 a year each, leaving us beneath the threshold.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Low income people often DO know that they have leverage over employers if they are paid under the table. I'm the PP from the previous thread whose friend got taken the cleaners when her fired housekeeper filed for unemployment. It was clear the housecleaner knew exactly how to exact revenge for the firing. It wouldn't be out of the relm of possibility in this area for a disgruntled, under the table employee to resort to blackmail if a relationship went sour.

After watching what my friend went through, I would never ever ever pay someone under the table. Not worth it!!!!!

I second that last part. I would also never let someone work in my house until after I have established (a) if they are an LLC/company and (b) if they are bonded and insured. You set yourself for a lot of risk and liability.

What nonsense are you talking about? There 's nothing that I see in IRS law about an IC having to be an LLC.
.

Does my IC house painter have to be an LLC to? He doesn't speak English all that well.

[Anonymous]

Anonymous wrote:We pay $75 a week but 3 people come, so technically, we pay each person $25 a week and that only totals $1300 a year each, leaving us beneath the threshold.

This is similar to my situation. So this is correct?