Silver Master,
As a result of the 2020 global pandemic my wife and I have been worried about exposing myself to others. We are lucky enough to be able to work from home so we are always here, and no one else is allowed in our home.
Because of this, we have tried to prepare to be out of the house when our housewife comes to clean. This is not always possible so over the years, we asked her to tidy up our house on the days when we were home.
Realizing that times are tough, we continued to put her pay for the weeks where we asked her to stay home. My question is: Since we gave her money but no work was done, should she consider this income or gift?
While it won’t change my fees, it would definitely have an impact. Would it help if I provided a statement of all payments and which ones were for the cleaning itself, along with a letter stating our position that the others were gifts?
Willing to do the right thing and the wise thing
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Dear willing,
When so many domestic workers are losing money due to the pandemic, I want to thank you for identifying your housewife’s financial needs by paying for it and checking ways to give her money. Others struggle to pay householders during this time. Many domestic workers are undocumented and not entitled to unemployment. You are lucky because you are healthy and can still afford to pay your housewife, and aware that you are choosing to do so.
That said, I sought the experience of Bill Smith, Managing Director for the Office of National Taxation at CBIZ MHM, a provider of business consulting, taxation and financial services. “Everything is more likely to be considered a salary, as the person is still in control of the employee,” he said. “The house worker is paid to keep them under control as an employee. Since it has to wait and wait until it is released, it equates to work. ”
Revenue Service Disclosure 926 addresses this: “You have a domestic worker if you have hired someone to do housework and that employee is your employee. The employee is your employee if you can control not only what work is being done, but how come it is done. If your employee is your employee, it does not matter whether the job is full-time or part-time or whether you employed the employee through an organization or from a list provided by an organization or association over. ”
The group cites this theoretical example: “You pay Betty Shore to sit on your baby and do light housework 4 days a week in your home,” he says saying. “Even if the employer wants to cut back on the employee’s time, and give her a fancy holiday gift, the result is likely to be the same. The IRS seems to see the gift as payment for not looking for another job because its time has been reduced, which equates to paying it for a standstill period. “It’s part taxes, part logic philosophy. That’s the IRS!
Thank you for hiring your housewife and for looking for ways to make her life easier, even if it doesn’t affect your own finances. Being willing to reduce a housewife’s financial burden is a good intention in itself. German Enlightenment philosopher Immanuel Kant wrote: “Goodwill is not because of what it affects, or achieves, not because of its health to reach an intended goal, but good just by being willing. ”
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