people don't realize they have to pay payroll taxes on individual housecleaners
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Anonymous
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I don't think, from reading one of the threads on here recently, that people realize that even if their individual housekeeper only comes once a week, they *still* likely have to pay payroll taxes (SS, unemployment, et cetera) if they pay the person more than $1800 in 2012 (don't know what it is for 2013).
http://www.4nannytaxes.com/index.cfm/faq/nannyhousekeeper-faq-list/payroll-taxes-cleaning-lady/ If you have an individual who cleans your house (not a company that you use), do you pay payroll and SS taxes? |
Anonymous
| Thank you for taking this to another thread! I'm the OP who asked about housekeepers and that thread has been hijacked. FWIW, every person we've ever hired we have paid taxes on, SS, done it all legally. When we use a cleaning service, of course, the service hires the cleaners and pays all of that. When we've had an individual cleaning person, we've done taxes, etc. |
Anonymous
Timely post. We did, and later switched to using a company because we didn't want the hassle any more. If you don't pay your employee's SS taxes, their earnings from you won't "count" when they retire. Their future SS check will be that much lower. |
Anonymous
| This is why, as a federal employee and lawyer, I have always used an LLC for our housecleaners. I would personally not want to use a national chain but, there are lots of small cleaning business in our area for this very reason. Washington DC is one of the few large cities in the US where I think people are aware of this. Everyone I know in other US cities: NYC, Chicago, Atlanta, Seattle, San Francisco, etc... do not pay taxes on any household employees, not even nannies. It is all under the table. I have found that most folks in DC are more aware. |
Anonymous
| We pay all the taxes for our weekly housecleaner and have for 20 years. We pay both sides of the payroll tax, plus unemployment, so it adds a good 15% to our weekly cost. While it's not that hard to do the paperwork (the only pain is the quarterly MD unemployment taxes) when she retires I would consider using a service to get away from the hassle. |
Anonymous
| This is why many people have housekeepers come every other week. |
Anonymous
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. |
Anonymous
You might still be paying enough to need to pay taxes. But the question about housekeepers is different from cleaning services, which can come every two weeks. For what a housekeeper does, one day a week would be the absolute minimum. |
Anonymous
| 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. |
Anonymous
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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. |
Anonymous
If she has her own business and is set up as an independent contractor or separate business then you may not need to pay. |
Anonymous
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. |
Anonymous
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Unless your housekeeper is an LLC you are on the hook. Read the law as it specifically addresses weekly cleaners. To be legit you'd have to have gotten w-9 information, and issue a 1099 at the end of the year.
The every other week thing doesn't make sense, unless that happens to put you under the income limit. It would not for us as we pay $195/visit. |
Anonymous
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We used the same person for a long time and were under the threshold no matter how you look at it. Then we moved to a bigger house, but by then she had expanded and usually came with one other person, or sent two people and didn't even come herself. At that point we figured we were either dealing with a sole proprietorship or else we could cut the amount we were paying in half because we were paying each person half at worst.
At some point the possibility that we might have to justify this to someone became a little more real and we switched to another person who has basically the same arrangement except that she's incorporated and assured us that she pays her employees social security and sends them a W2. |
Anonymous
They do their own taxes (meaning you don't have to withhold their share, but you have to pay the employer's share). But when someone works in your home (housecleaner, nanny) as an individual (not with a company, like merry maids), you have to pay employment taxes (SS, unemployment) if you pay her more than the threshold amount in the given year. The other employers have to do the same. It's sort of like she works part-time for you and for other employers. Only if she is set up as an LLC and has her own company does this reality change. But this is rarely the case, and the onus is on you to ask if she is set up that way (as well as if she is legally allowed to work here). Again, an individual is *different* than a company. A company is licensed and bonded and has a different tax arrangement. But if she is not set up as a company and everyone is just assuming she's an independent contractor, you are in the wrong. Housekeepers and nannies who are not incorporated and not working for a company are *NOT* independent contractors. If you have them working in your home, you are the employer, and you are responsible for filing the paperwork and taxes as an employer. Ask an accountant. |