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

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[quote=Anonymous][quote=Anonymous][quote=Anonymous]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.[/quote]

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.[/quote]

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.[/quote]

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