Are you getting the most out of your home-office deduction? If you’ve got a cleaning woman (or man) who keeps your house and office spic and span,  do you need to pay a “Nanny Tax” on this service or can you classify this expense as a Independent Contractor?

The cleaning person is an independent contractor or an employee if:

  • The cleaner clean as he or she sees fit, with little or no direction.
  • The cleaner provides his or her own supplies.
  • This person cleans many houses.

If so,  your cleaning person can be classified as an independent contractor.  The freedom to exercise professional judgment offers strong evidence for this classification. The ownership and supply of the cleaning equipment further supports an independent contractor classification. Plus,  working for multiple clients suggests that he or she is an independent contractor.

If you paid  $780 or more to clean your office throughout the year, you’ll need to provide him or her with a 1099-NEC. You’re not liable for the nanny tax because of the independent contractor status with respect to cleaning your home. One warning: if you don’t file Form 1099-NEC, you may trigger an intentional disregard penalty of $630 or more for each failed 1099-NEC.

Can this be useful if you are a House Hacker? Visit my Youtube channel to find out: (581) Tax Write-Offs for House Hackers – YouTube