@Anonymous wrote:
And just a friendly PSA...
Any individual whom you employ to provide services in your home whom you pay directly AND whose total payments in the calendar year meets the IRS household employment threshold, $2,700 currently (2024), must receive a W-2 from the employer (family) and the household employer must pay the payroll taxes.
Which would basically mean you paying the employer portion of FICA/Medicare tax, or paying both employer/employee if you don't deduct. and, if required Federal and/or state unemployment.
So either pay below the threshold, or hire a company. Or be lucky and don't run for office.
From the IRS site:
You have a household employee if you hired someone to do household work and that worker is your employee. The worker is your employee if you can control not only what work is done but how it is done. If the worker is your employee, then it does not matter whether the work is full time or part time nor that you hired the worker through an agency or from a list provided by an agency or an association. It also does not matter whether you pay the worker on an hourly, daily, weekly or by the job.
Example. You pay Betty Shore to babysit your child and do light housework 4 days a week in your home. Betty follows your specific instructions about household and childcare duties. You provide the household equipment and supplies that Betty needs to do the work. Betty is your household employee.
https://www.irs.gov/businesses/small-businesses-self-employed/hiring-household-employees
Therefore, instead of telling your housekeeper exactly how to do things, just leave the house, tell him/her "Have at it!" and then he/she is (arguably) not an employee. Have a written contract with Betty and 1099 her at the end of the year. That's about all you can do. I knew a housekeeper and NO ONE ever W2ed her. NO ONE in 20 years of housekeeping. A couple of people 1099ed her and she never worked for them again LOL.
From what I remember in law school, the litmus test for an employee is that HOW they do their work is controlled by someone else. "HOW" can relate to: their hours, the tools they use, where they work, what they wear, etc. Obviously the housekeeper will be working in your home but you will not be telling her how many hours she will be on the job nor telling her what tools to use to complete the job. And if you're out of the house when she does it, you're not directly supervising either.
These would be my arguments at an audit and honestly I think it's a good enough argument to take in front of a tax judge if need be. And I'm sure this has all been litigated before.
51-year-old licensed banking and finance attorney. Series 65 registered investment advisor. Southern California. I am happy to educate anyone under the age of 40 but I will not argue with you because you know nothing and I have better things to do. I have been doing this longer than you've been alive. If you want my advice, you can pay me with sincere gratitude or money, and not necessarily in that order.
Fico8: EX~EQ~TU~840 (12 month goal~850).