Do I Have To Report What I Pay My Housekeeper?

Having someone come clean your house every other week, mow your lawn, or pick up your kids can be a real timesaver. If you are able to find someone to do these jobs for you at a reasonable price, the benefit is even greater. When it comes to tax time, though, you may be wondering if you should have withheld employment taxes from the paychecks of household employees, or whether what you’ve paid is a deduction that will help lower your tax liability.

The answer can be found in IRS rules and regulations regarding household help:

• You do not need to withhold taxes from independent contractors. Those people that offer services to you at times or manners not under your control are considered independent contractors.
• There is no need to withhold taxes from pay made to certain family members, such as your spouse or a child under 21.
• For “employees” under 18 you do not need to hold out any taxes for payments made, as long as the work or services provided are not the primary occupation of the worker.

The rule regarding those under 18 years old, think of your babysitter. Those that watch your kids when you go out on date night are likely under 18, and watching kids is not their primary occupation. This is especially true when the sitter is a student and has no other form of income. Knowing how to classify household workers is important at tax time, so you can make certain to file your return accurately. When in doubt, contact a knowledgeable legal, tax professional to find out how the IRS rules impact you.

If you have questions about taxes and how to treat independent contractors and others that provide services around your home, let the professionals at Nielsen Law Group help you negotiate with the IRS. Call (480) 888-7111 or submit a web request here.