Home Office Deductions for Cleaning Services

Home Office Deductions for Cleaning Services

We want to offer some insights regarding an important tax aspect related to the home office deductions for cleaning services.

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

First, the amount you pay for cleaning services can affect your taxes. Say you pay $200 every two weeks, totaling $5,200 annually. Given that your office is 15 percent of your home, you pay $780 to clean your office and $4,420 to clean your home.

Here are two key questions:

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

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

Given the conditions of cleaning servicer’s work— they clean with little or no direction, provide their own supplies, and clean many other houses—they exhibit the characteristics of an independent contractor.

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

Please note that if you fail to file Form 1099-NEC, you could face an intentional disregard penalty of $630 or more for each missed form.

If you would like to discuss the Nanny Tax or 1099-NEC requirements, don’t hesitate to reach out to us.

 

Helpful IRS link:

1099-NEC form

 

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