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  • jfoxcpacfp jfoxcpacfp 
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    Status: Financial Advisor, Accountant, Small Business Owner
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    Joined: 01/09/2016
    • Get references of a couple of people s/he has worked for.
    • If she has her own business, ask about workmen’s comp. If the person/company isn’t covered, you could be liable for medical expenses for any injuries s/he incurred while cleaning your house.
    • If she doesn’t have her own business, you’ll have to file a W2 and pay FICA taxes on her if you pay her enough. Most employers pay both sides. You can do this once/yr with your 1040.
    • Lay out expectations in advance. Much easier than going back later and saying “this isn’t what I expected”.
    Click to expand…

    I would be shocked if the vast majority of folks that use an independent cleaning lady/man (i.e, not employed by a service such as Molly Maid), particularly found by word of mouth from a friend or neighbor, actually pays taxes as per your recommendations. And at current rates with a cleaning of twice per month, I would calculate that annual costs are greater than $2100. As mentioned above, I suspect that most pay cash for these services. I’m not suggesting this is ethically the right thing to do, but I think you are fooling yourself if you believe otherwise. Although, as an accountant I understand your obligation to bring it up.

    Click to expand…

    I don’t recall providing any statistics on who follows the law and who doesn’t in this area and I am well aware that not everybody follows the rules in this regard, but you might be surprised to learn that our clients do. And a high-income professional who doesn’t follow the law is taking great risks by doing so and I’m not necessarily referring to the IRS but to an “employee” who will file a claim for worker’s comp or unemployment benefits. imo, doctors who pay under the table are fooling themselves that this is a convenient solution.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~ 270-247-0555
    https://fox-cpas.com/for-doctors-only/

    #170092 Reply
    Liked by Tim
     okayplayer 
    Participant
    Status: Physician
    Posts: 50
    Joined: 05/25/2016

    If you stay under the $2100 and therefore don’t need to report their income are you at risk for this?

    #170096 Reply
     jz 
    Participant
    Status: Physician
    Posts: 578
    Joined: 01/09/2016

    Johanna, your interpretation seem extreme for  IC workers. Would you pay workers compensation for the IC guy  who paints your home?, the IC man who installs your drapes?  Must my brother pay workers compensation for the Amish IC roofers?

    #170101 Reply
     Bmac 
    Participant
    Status: Physician
    Posts: 216
    Joined: 10/21/2017
    Splash Refinancing Bonus
    • Get references of a couple of people s/he has worked for.
    • If she has her own business, ask about workmen’s comp. If the person/company isn’t covered, you could be liable for medical expenses for any injuries s/he incurred while cleaning your house.
    • If she doesn’t have her own business, you’ll have to file a W2 and pay FICA taxes on her if you pay her enough. Most employers pay both sides. You can do this once/yr with your 1040.
    • Lay out expectations in advance. Much easier than going back later and saying “this isn’t what I expected”.
    Click to expand…

    I would be shocked if the vast majority of folks that use an independent cleaning lady/man (i.e, not employed by a service such as Molly Maid), particularly found by word of mouth from a friend or neighbor, actually pays taxes as per your recommendations. And at current rates with a cleaning of twice per month, I would calculate that annual costs are greater than $2100. As mentioned above, I suspect that most pay cash for these services. I’m not suggesting this is ethically the right thing to do, but I think you are fooling yourself if you believe otherwise. Although, as an accountant I understand your obligation to bring it up.

    Click to expand…

    I don’t recall providing any statistics on who follows the law and who doesn’t in this area and I am well aware that not everybody follows the rules in this regard, but you might be surprised to learn that our clients do. And a high-income professional who doesn’t follow the law is taking great risks by doing so and I’m not necessarily referring to the IRS but to an “employee” who will file a claim for worker’s comp or unemployment benefits. imo, doctors who pay under the table are fooling themselves that this is a convenient solution.

    Click to expand…

    I don’t disagree with anything you are saying. It would be interesting to see an (honest) poll regarding how many households, regardless of income or professional status, actually correctly report these sorts of household employees on their tax returns. My suspicion is that childcare/nanny type providers (typically earning much more) are more likely to be reported on tax returns but the person that cleans the house twice a month rarely is.

    #170108 Reply
     G 
    Participant
    Status: Physician, Small Business Owner
    Posts: 1095
    Joined: 01/08/2016
    • Get references of a couple of people s/he has worked for.
    • If she has her own business, ask about workmen’s comp. If the person/company isn’t covered, you could be liable for medical expenses for any injuries s/he incurred while cleaning your house.
    • If she doesn’t have her own business, you’ll have to file a W2 and pay FICA taxes on her if you pay her enough. Most employers pay both sides. You can do this once/yr with your 1040.
    • Lay out expectations in advance. Much easier than going back later and saying “this isn’t what I expected”.
    Click to expand…

    I would be shocked if the vast majority of folks that use an independent cleaning lady/man (i.e, not employed by a service such as Molly Maid), particularly found by word of mouth from a friend or neighbor, actually pays taxes as per your recommendations. And at current rates with a cleaning of twice per month, I would calculate that annual costs are greater than $2100. As mentioned above, I suspect that most pay cash for these services. I’m not suggesting this is ethically the right thing to do, but I think you are fooling yourself if you believe otherwise. Although, as an accountant I understand your obligation to bring it up.

    Click to expand…

    I don’t recall providing any statistics on who follows the law and who doesn’t in this area and I am well aware that not everybody follows the rules in this regard, but you might be surprised to learn that our clients do. And a high-income professional who doesn’t follow the law is taking great risks by doing so and I’m not necessarily referring to the IRS but to an “employee” who will file a claim for worker’s comp or unemployment benefits. imo, doctors who pay under the table are fooling themselves that this is a convenient solution.

    Click to expand…

    Interesting discussion.  In my state, it is the law if you are in business to have unemployment and worker’s comp insurances.  I wonder what how that would shake out in court if an IC didn’t and tried to sue you for a job injury?

    I feel even better about my new bigger umbrella policy.

    #170109 Reply
     Doc Spouse 
    Moderator
    Status: Small Business Owner, Spouse
    Posts: 100
    Joined: 10/20/2017

    Interesting discussion.  In my state, it is the law if you are in business to have unemployment and worker’s comp insurances.  I wonder what how that would shake out in court if an IC didn’t and tried to sue you for a job injury?

    I feel even better about my new bigger umbrella policy.

    Click to expand…

    Same here.  Most housecleaners are bonded and insured, too.  It was definitely something we looked for when we hired ours.  Same goes with electricians, yard work, etc.  Just because we have an umbrella policy, doesn’t mean we want to use it. 😛

    #170128 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 6116
    Joined: 01/09/2016
    Earnest refinancing bonus
    It would be interesting to see an (honest) poll regarding how many households, regardless of income or professional status, actually correctly report these sorts of household employees on their tax returns. My suspicion is that childcare/nanny type providers (typically earning much more) are more likely to be reported on tax returns but the person that cleans the house twice a month rarely is.

    Click to expand…

    Probably so, but possibly because many solo’s are doing multiple jobs and don’t make $2,100 in any one place. Mine comes in every 2 wks for $75 each time. That leaves it up to the house cleaner to report on a schedule C.

    The lady who cleans our house probably gets about $15/hr from us, but she charges by the job, not hourly. I suspect if the house-cleaners around here thought they could make $30/hr, they would consider picking up and moving!

    I, too, would love to see a poll on this.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~ 270-247-0555
    https://fox-cpas.com/for-doctors-only/

    #170138 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 6116
    Joined: 01/09/2016

    Johanna, your interpretation seem extreme for  IC workers. Would you pay workers compensation for the IC guy  who paints your home?, the IC man who installs your drapes?  Must my brother pay workers compensation for the Amish IC roofers?

    Click to expand…

    Good grief – I would never hire a roofer who couldn’t show me proof of having worker’s comp! Talk about liability – have you seen the rates roofers pay? My hubs used to be in partnership with a couple of guys and the worker’s comp insurance was astronomical. There’s a reason for that – because of such high injury rates on the job. Do Amish not believe in insurance? That’s a serious question – I just don’t know myself. I believe the Mennonites in our area do have insurance and are pretty good business people.

    I’m not going to worry about someone installing drapes, but I would about the painter if it were outside on a multiple-story house.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~ 270-247-0555
    https://fox-cpas.com/for-doctors-only/

    #170139 Reply
     Anne 
    Participant
    Status: Physician
    Posts: 542
    Joined: 11/07/2017

    Johanna, your interpretation seem extreme for  IC workers. Would you pay workers compensation for the IC guy  who paints your home?, the IC man who installs your drapes?  Must my brother pay workers compensation for the Amish IC roofers?

    Click to expand…

    Good grief – I would never hire a roofer who couldn’t show me proof of having worker’s comp! Talk about liability – have you seen the rates roofers pay? My hubs used to be in partnership with a couple of guys and the worker’s comp insurance was astronomical. There’s a reason for that – because of such high injury rates on the job. Do Amish not believe in insurance? That’s a serious question – I just don’t know myself. I believe the Mennonites in our area do have insurance and are pretty good business people.

     

    Click to expand…

    Amish, at least traditionally, do not believe in insurance and consider themselves self-insured–i.e. the community as a whole will pay.  Mennonites traditionally are the same way but have greater variability in practice.  Amish businesses, at least in my home state, have religious exemption from the requirement to carry workers comp.  The flip side is that an Amish person would be very unlikely to sue for personal injury (they will sue however if they feel their rights are being infringed on).

    Dont ask me how I know this.   Too much time spent in horse and buggy country.  Amish culture is really fascinating though.

    #170172 Reply
     tomato14 
    Participant
    Status: Physician
    Posts: 7
    Joined: 03/11/2018

    Thank you everyone for the responses.  Thanks also for the nanny tax link.  Was not aware of that and it’s important!

    #170521 Reply
     royalblue 
    Participant
    Status: Spouse
    Posts: 6
    Joined: 11/30/2018

    I was always cleaning my house before the cleaners got there. We downsized our home and do it myself now. Its actually less stressful not having to prep

    #170567 Reply
    Rogue Dad, M.D. Rogue Dad, M.D. 
    Participant
    Status: Physician
    Posts: 816
    Joined: 03/07/2016
    was always cleaning my house before the cleaners got there. We downsized our home and do it myself now. Its actually less stressful not having to prep

    Click to expand…

    This.

    We have 3 young boys and a large house.

    Just the specter of having to “clean up” before the cleaner arrives means we’re probably less messy than we otherwise would be.  We let the kids have the basement as a giant unorganized play area, and while the rest of the house isn’t kept “clean” we only let it get so chaotic before we make them put away their stuff.

    http://www.RogueDadMD.com

    An alt-brown look at medicine, money, faith, and family

    #170611 Reply
    Drop it into MD Drop it into MD 
    Participant
    Status: Physician
    Posts: 232
    Joined: 09/20/2018

    Having a cleaner forces us to pick up every too weeks.  Also I have little children and keeping it that way for a few hours is difficult.  I cannot tell you how many times I was so stressed out about keeping the house clean for the cleaner that I almost decided to stop the service.  Then I relax and realize that if these are the things that I have to worry about then life is pretty good 🙂

    #170657 Reply
     royalblue 
    Participant
    Status: Spouse
    Posts: 6
    Joined: 11/30/2018

    Exactly my thoughts!  So many times I thought of cancelling the cleaners because I didn’t want to prep. After moving I didn’t want to restart the service. Its been great.  Other then having to do it all myself. The grass is always greener….

    #171348 Reply
     JWeb 
    Participant
    Status: Physician
    Posts: 76
    Joined: 02/21/2017

    Things that make my wife the happiest:

    1. Kid #3

    2. Kid #1

    3. Kid #2

    4. Our house cleaner

    5. Country music concerts

    6. Me

    #171432 Reply
    Liked by ENT Doc

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