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Paying my cleaner

Hello,

I was planning on paying my cleaner out of pocket but then I have seen a lot of people saying that you have to do a 1099 form.

I am definitely new to this area and I was wondering if anyone could help? Or should I just ask our accountant?

You need records in order to be able to make it a deductible expense.

What does “out-of-pocket” mean to you?

if you deduct that expense from your income (which you should, because you will save a lot in taxes), then you need to keep records. If you pay a contractor (your cleaner) more than $600 in a year, then you need to send a 1099 (usually 1099-MISC) to the contractor and to the IRS by Jan 31.

Out of pocket means I would pay her from the money that I made without getting the IRS involved but now I see that would be a mistake.

This is the one part I didn’t think through.

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There is a time and place for “dinero negro”, and a tax deductable expense isn’t one :wink:

JF

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Yes, even if you ignore the possibility of it being illegal.

Assuming your income tax rate is higher than your contractor’s income tax rate, then both you and the contractor can make more money if you take the deduction, file the 1099, and let the contractor pay the income tax.

Is your cleaner an individual or someone you hired through a company? If it is a cleaning company, they will handle any taxes, but if it is an individual (which it sounds like it is), you should definitely pay on a 1099. It’s fairly common for cleaners to ask to be paid without any tax records, but it’s illegal and I wouldn’t risk getting involved in it.

No, she’s my Mom’s friend and I just found out she is on disability and isn’t supposed to work. This means, I will now have to find someone new.

Oh boy, sounds like a great situation for the friend. Double fraud of the IRS and disability system?

I didn’t realize she was on disability.

I am glad I figured this out before this all happened.

Great. You can now offer her half the minimum wage.

Joking…

JF

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You wouldn’t be able to make the cleaning a deductible business expense if you paid the cleaner under the table so I’m not sure why you thought it might be a good idea?

If you pay more than $600 a year you are supposed to file a 1099 if paid in cash or check. If you using electronic methods it becomes confusing. For example paypal should send your cleaner a 1099K if they are business transactions. But most people send money via person to person.

I CLEARLY wasn’t thinking, that’s why! I just found someone who I knew and didn’t think of it further until right now when I was setting up my business stuff.

Not my finest moment, I will admit.

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There’s nothing wrong with needing a nudge along the way. :slight_smile:

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I found a cleaner whose company is fully insured and is a veteran who donates money to charities to help veterans. The best part, she’s cheaper than the person I was going to have do it.

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Hi there, Appreciate the one humorous post (*as I need it right about now). I have never sent my cleaners 1099’2. They are a family, only one of them is legal, and I’ve literally paid them using Venmo…for years :/. I have been using a Terrible accountant. Nonetheless, it is too late. Should I risk it and call it a “fee” and not categorize it as cleaning? I also use friends here and there- they could definitely provide me invoices for $595 (under $600, which is the going rate for any service not to have to be 109’s). Is there any way around this, at this point beyond prayer? lol. I started making a Lot of money over the last 2 years- I am definitely concerned about an audit. Has anyone here ever been audited?

Paying someone less than $600 only means you aren’t required to file the 1099. It does not mean the recipient isn’t required to pay taxes on that money. You probably don’t want to go down that path, especially if your “friends” might have reasons they don’t want to be audited.

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