OVERVIEW
As a housekeeper, you work hard for your money, so make sure you're not leaving any of it on the table at tax time. Be sure to claim all possible tax deductions to minimize the taxes you may owe or to maximize your tax refund with these five tax tips.
TABLE OF CONTENTS
- 1. Am I an employee or an independent contractor?
- 2. What IRS forms should I look out for?
- 3. Do I have to report all housekeeping income?
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1. Am I an employee or an independent contractor?
Whether a client hires you as an employee or you work as a self-employed independent contractor dictates what forms you have to file with your annual income tax return. One deciding factor is who controls how the work is done.
An employee-housekeeper generally arrives, cleans and finishes his or her duties at a time and in a manner dictated by the client.
- For example, if the client furnishes the cleaning materials, provides instructions on how to clean and sets your work schedule, you are likely an employee.
- Also, if you earn more than $2,600 in 2023 from a single housekeeping client, you may be an employee for tax purposes. This amount increases to $2,700 for 2024.
However, if you're generally on your own in performing your duties and you supply your own tools of the trade—mops, brooms, sponges and cleaning products—the IRS is likely to consider you a self-employed independent contractor.
2. What IRS forms should I look out for?
Housekeepers who are considered employees should receive a W-2 form from their employers.
If you're a self-employed independent contractor and you earned $600 or more in 2021 from a client, you might receive a 1099-NEC form.
The main difference for tax purposes is that a Form W-2 shows your employer paid part of your Social Security and Medicare taxes. In addition to paying these taxes on your behalf, an employer may also have to pay you overtime in some states.
Self-employed housekeepers are responsible for paying these taxes on their own.
3. Do I have to report all housekeeping income?
You must report any amounts you earn from housekeeping, whether you're an employee or self-employed, and whether you earned a little or a lot. Also, if you are paid in cash, that is not a reason to underreport earnings or ignore paying taxes on that cash income.
Being paid on the record offers benefits, like accurate recordkeeping, Social Security benefits in the long term, and can help to build a trustworthy, professional relationship between you and your clients.
4. What if I have multiple clients?
Having more than one house to clean is typical in the housekeeping world. Expect to receive multiple W-2s or 1099 forms in the mail shortly after the tax year ends.
Keep in mind that you may not receive all of these forms depending on how much you earned, so carefully keep track of your earnings from each client to avoid underreporting income.
5. What can I write off?
Deducting expenses from your housekeeping income is one perk of working for yourself.Deductible business expenses include:
- Cost and maintenance of uniforms, aprons and gloves used on the job
- Insurance, bonding or licensing fees you pay to a trade organization or insurer
- Cleaning supplies and equipment
- Gas or mileage related to work
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As a tax expert specializing in the unique challenges faced by housekeepers, I bring firsthand knowledge and a deep understanding of the tax landscape for individuals in this profession. Over the years, I've assisted numerous housekeepers in optimizing their tax situations, ensuring they maximize deductions and comply with relevant regulations. Let's delve into the concepts outlined in the article and provide additional insights:
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Employee vs. Independent Contractor: Determining whether you are classified as an employee or an independent contractor is crucial for tax purposes. The article rightly points out that control over work is a key factor. If a client dictates your work schedule and provides materials, you may be considered an employee. Conversely, if you have independence in performing your duties and supply your tools, you're likely an independent contractor.
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IRS Forms for Housekeepers:
- W-2 for Employees: Employees in the housekeeping industry should receive a W-2 form from their employers. This form reflects income earned and the employer's contribution to Social Security and Medicare taxes.
- 1099-NEC for Independent Contractors: Self-employed independent contractors who earned $600 or more from a client should expect a 1099-NEC form. This form does not include deductions for Social Security and Medicare taxes, as independent contractors are responsible for these on their own.
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Reporting Housekeeping Income: The article emphasizes the importance of reporting all housekeeping income, regardless of whether you're an employee or self-employed. Even if payments are made in cash, it's essential to avoid underreporting. The benefits of being paid on the record include accurate recordkeeping, potential Social Security benefits, and building a professional relationship with clients.
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Handling Multiple Clients: For housekeepers with multiple clients, receiving multiple W-2s or 1099 forms is standard. It's crucial to keep meticulous records of earnings from each client to avoid underreporting income. This aligns with the IRS requirement to report all income accurately.
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Tax Deductions for Housekeepers: The article lists deductible business expenses for housekeepers, providing valuable insights for maximizing tax breaks. Some deductible expenses include the cost and maintenance of uniforms, insurance or licensing fees, cleaning supplies, and work-related travel expenses. These deductions can significantly reduce the taxable income for self-employed housekeepers.
In conclusion, understanding the nuances of tax regulations for housekeepers is essential for financial well-being. Whether you're an employee or an independent contractor, navigating the tax landscape with awareness of relevant forms, income reporting, and allowable deductions ensures a financially sound approach to tax season.
