The Cleaning Crew and Your Home-Office Deduction

July 9, 2024

If you have an office in your home that qualifies for the home-office deduction and you employ a cleaning person who maintains both your home and your home office, there are a couple of tax considerations to keep in mind.

The amount you pay your cleaning person for their services can have an impact on your taxes. Let’s assume you pay them $200 every two weeks, totaling $5,200 annually. Say your office is 15 percent of your home. In this case, you pay them $780 to clean your office and $4,420 to clean your home.

Here are two key questions:

  • Should you pay your cleaning person through a W-2 or a 1099 for the office cleaning?
  • Do you need to pay the Nanny Tax for the home cleaning?

The answers depend on whether the cleaning person is considered an independent contractor or an employee.

Given the conditions of their work—they clean with little or no direction, provides their own supplies, and cleans many other houses—they exhibit the characteristics of an independent contractor.

Accordingly, for the $780 you paid them to clean your office, you should provide them with a 1099-NEC form. On the personal front, you are not liable for the Nanny Tax because the cleaning person qualifies as an independent contractor.

This could be an extra deduction that is not being claimed.

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