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][quote=Anonymous][quote=Anonymous][quote=Anonymous]I think even if someone would be an independent contractor under most definitions, it they are a housekeeper special rules apply - and you have to pay taxes legally.  so just pay in cash.[/quote]
Special rules for housekeepers? That's news to me. Does my gardening service have special rules to, according to you?[/quote]

Go to www.irs.gov.  Read publication 926.  There are not special rules for housekeepers.  There are special rules for [u]all [/u]household employees.[/quote]
Including the personal assistant?[/quote]

I'm the PA who posted earlier.  I still don't see how the arrangement I have with my employer (and therefore a housekeeper who chooses it) is doing something wrong.  If my employer and I agree that I am a 1099 employee and he issues me a 1099 and I pay all the required taxes, doesn't that make me an IC by definition, regardless of whether or not I use his supplies, which I do, or if he gives me specific directions, which he does?  If a housekeeper accepts a 1099 and pays all the required taxes, doesn't that make her an IC?  The IRS doesn't care which tax relationship you enter into with the people who do work in your home, just that that relationship is legal and all taxes are paid.  Since the definition of "domestic help" is loose, people who comply with the law in either way would seem to be fine. I can see why a housekeeper wouldn't want to accept a position if she didn't want to pay taxes like an IC, but not why the IRS would care how the taxes get paid. [/quote]

No.  I had a situation where I was considering myself an IC, as was my employer.  My employer was issuing me a 1099.  I *wanted* to be an IC, because it enabled me to deduct some expenses.  The employer wanted me to be an IC because she then didn't have to play unemployment insurance, employer-paid Social Security, et cetera.  The IRS audited my employer and determined that I was not an IC, that I was an employer.  The IRS fined my employer.  They settled and had to pay some back taxes and a fine.  The IRS left me alone.

The reason the IRS cares is that the taxes an IC pays are a lot less than the taxes an employer would pay on an employee.  Remember, the IC is only paying the employee's portion of taxes and Social Security.  With an employee who is not an IC, the employee pays taxes as does the employer.  Not to mention, unemployment insurance is also paid (and that isn't the case with an IC).  That is why the IRS cares, and that is why there has been some cracking down in certain industries.

Again, it doesn't matter if the housekeeper pays her taxes.  That's not what defines whether or not she is an employee.  The IRS has rules.  Some of them are kind of vague or not entirely clear (as in the "does the person determine their own work").  But I'm telling you from experience that the IRS usually errs on the side of defining a person as an employee versus an IC (that is if they audit, which is probably unlikely in the case of individual households hiring maids).[/quote]

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