Not giving tax advice here. You should consult a competent tax professional. Have you heard of this?

I know someone who volunteers to help low income people with their tax returns. With regards to household workers that receive a 1099 from the family, he loves helping the worker file a Form 8919, Uncollected Social Security and Medicare Tax on Wages and then also separately a Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. Based on the documentation provided, the IRS will most likely go back after the family for not providing a W-2 as a household employee.

In this case the IRS will most likely go back several years the person has been working for the family. The IRS looks at it as tax fraud.

This is why a lot of families pay through a service to take care of all that. Or they just pay cash and be done with that (which is also not legal, but sometimes simple in the short term).

By the way this doesn't apply to like the occasional baby sitter.

I have heard of it, but have never done this in my own tax practice. Had one client who should have done this, but she didn't want to "cause trouble", and I would only file these if the client wanted it done.

Yeah, status as a "independent contractor" vs "household employee" makes a huge difference, and it's not a simple either/or test - there's multiple factors that go into it, such as how much control the employer has over working hours, place worked, etc.

As in a person that comes and cleans for a few hours every week or two or a daily person that works a full day? They shouldn't be employees of they clean other people's houses or businesses and keeps their own schedule.

I believe this is one the things those new IRS agents are looking to get you on.

Keep in mind the trigger is if the home entity tries to 1099 the household worker.

I would run into 1099’s on the very few part time jobs I worked. I think at the time there was a 750 dollar minimum for the form to be required but some people thought it was needed for any amount.

My acquaintance sent me this as an example. The purpose of the post was to advise caution for anyone who may be thinking to 1099 a household worker or like a nanny.

https://weaver.com/blog/knowing-difference-household-employee-vs-independent-contractor

https://www.irs.gov/businesses/small-businesses-self-employed/hiring-household-employees

My tax person is asking me to send all my contractors a 1099 so I can claim a deduction since it was all business related.

Does that sound normal? We are taking somewhere in the $80,000 range for 2023

BS like this is why I deal so much in cash. They are paper pushers that exsist in a world where paper is everything. I am not and won't jump through their hoops.

Not a tax professional, but as they are independent contractors instead of household employees, that seems as it should be to give them a 1099. That sounds like the proper use of a 1099.

Maybe somebody can comment?

As I understand it the pain is going to be with a household who 1099s their house keeper or nanny.

“Why is worker classification important to families?

Misclassification – treating a nanny or house keeper type worker as an independent contractor by giving them a 1099 and not as an employee – is considered felony tax evasion and could lead to major fines, penalties, and payment of back taxes.”

Note the term felony tax evasion.

Several years ago a lady who worked for a family as a housekeeper nanny filed for her social security. No employment taxes were ever paid.and no employment tax returns were ever filed.

Since thet were not filed there was no statute of limitations. The 3 year window did not apply.. The woman had paid her taxes as she had filed. The employing family got stuck with a huge tax bill plus a lot of penalties and interest.

A "household" claiming a business deduction with a 1099 sounds just down right dumb. If it was a business, paying someone to clean the business, then fine. A 1099 is justified. Giving a "nanny" a 1099 is even dumber. So there you go, Dumb and Dumber.

Amen

My tax man has me get invoices monthly from my home help. I get the write off and don’t have to supply a 1099.
We pay our help upon receiving the invoice..

Ya'll didn't think 80k new IRS agents were going after rich people did you?

Define rich

Only people I know with nannies earning enough to justify a 1099 are rich.....

......but I get your point

Unless the worker qualifies for an exemption (like being a corporation), the IRS generally requires you to send the 1099 forms out, and will hit you with steep penalties for failure to file if they catch it.

Looked it up. Nannies should not receive a 1099. It should be a W-2 if you want to follow the law.

Also the pay threshold to provide a Nanny a W-2 is $2600 for 2023. That's $217 per month. Doesn't look too rich?

I only know two people with nannies, they are wealthy, well beyond rich. The nannies are both live in, and both make close to six figures. I know that they both have accountants that probably make certain their tax obligations are met.