Cleaning Up

Today TaxMama answers Laura on the Internet. Laura is concerned “I’ve hired two women who are doing business as “Simply Clean” to clean my home. They are not incorporated, just two ladies cleaning houses. If I pay $35.00 per week for part-time services, do I treat them as household employees? What do I have to withhold, and how? If the check I write is payable to “Simply Clean”, whose taxes am I withholding?”



Oh Laura,

Where can I hire these women?! What a great price. I’m drooling. Clearly, you’re not in Southern California.

But don’t worry. You’re not affected by the household employee rules.

First of all, if you pay Simply Clean $35 for all 52 weeks, you’ve only paid them $1820 for the year. Divide that by two women and that’s $910 each, well under this year’s (2005’s) $1400 threshold for treating either of them as household employees.

Besides, they have a legitimate business.

They don’t fall under the household employee category since they are self-employed You’ll find the guidelines on who is a household employee in IRS Publication 926.
http://www.irs.gov/publications/p926/ar02.html#d0e80

But if you’re the least bit concerned, here’s what I recommend to protect yourself:

Get a copy of their business license
Get their federal ID #
Get their names, their business address and phone number – ideally, they should have a business card and/or a flyer with that information.

If you are using your home for business, you may want to send them a 1099 at the end of the year, since you are paying the business over $600.00.

Regardless,…this should take care of your issue.

And remember, you’ll find answers to lots of employee questions and other tax information, free. Where? At TaxMama.com

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