25 Aug Do I have to pay taxes for household help?

Q. I’ve always paid cash for cleaning ladies, babysitters and to a local kid who mows my lawn. Am I supposed to be paying taxes like an employer would?
— Taxpayer

A. You may be off the hook – at least when it comes to withholding taxes for these workers.

In these arrangements, with virtually no exceptions, the service provider is an independent contractor, said Steven Holt, an attorney and chair of the taxation, trusts and estates department at Mandelbaum Salsburg in Roseland.

Holt said that means no withholding is required on these types of payments.

“The the service provider can receive the full negotiated amount, without any deductions,” he said.

And, Holt said, there is no filing requirement if not for a trade or a business.*

The 1099-MISC form says:

“What is nonemployee compensation? If the following four conditions are met, you must generally report a payment as nonemployee compensation. You made the payment to someone who is not your employee; You made the payment for services in the course of your trade or business (including government agencies and nonprofit organizations); You made the payment to an individual, partnership, estate, or, in some cases, a corporation; and You made payments to the payee of at least $600 during the year.”

* In the initial post, Holt mistakenly said 1099s might be required in some circumstances. We regret the error.

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This post was originally published in August 2017.