Making your housekeeper tax deductable?

[hakrjak]

I'm trying to figure out a way to structure this. Our financial situation improved, and thank god we can hire back the servants in 2011!! (haha)...

My situation: I work from home 100%, as my day job requires it. I also run my 2 corporations out of my home. I have 2 home offices here (One for me, one for the wife).

I am hiring back the cleaning lady to come every other week at $100 a pop. That's $2600 per year. Can I deduct some or all of her fee? I was thinking about just paying her directly from one of my corporations via check, but was concerned that not 100% of her fee may be deductable even this way.... I plan on giving her a 1099 at the end of the year, as she is an independent contractor who comes with her own tools, cleaning supplies, etc...

My new CPA is kind of an idiot, so I don't dare ask him. Currently looking for somebody else, but in the meantime thought I'd open it up to the forum!

Thoughts? Ideas?

 

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[biophase]

I would love to do this also. My business takes up 3 of 4 bedrooms and the garage!

 

[MJ DeMarco]

Not an accountant but I believe you can deduct a portion ... if 30% of your house is used for business, then 30% of the housekeeper will be deductible if you use the home office deduction by % ... likewise, 30% of the utilities will also be deductible. Again, ask a Fastlane accountant, not some W2 chump.

 

[bflbob]

MJ. You're correct. That's the Home Office deduction.

The only trouble is that it's a red flag for an audit.

If those 3 or 4 bedrooms are full of product, desks, and office stuff, you're OK.
But if there's a bed or anything that looks like it isn't an office/work area, you'll likely get slapped.
Only, of course, if they check.

The rule is:

• Stuff that relates to the entire house gets pro-rated by either room or square footage. So, in an 8 room house (counting that garage), 4/8th's, or 1/2 of all household expenses -- utilities, insurance, interest, etc. can be deducted.
• Depreciation for that portion of the home can be written off.
• Any expenses directly related to the home office can be written off as normal business expenses. This means remodeling, painting, shelving units, etc.
• The downside is that the depreciation needs to reclaimed when the home is sold, just as you would a rental.

But make sure you check with your accountant to be sure things haven't changed. There have been a lot of tax changes lately.

 

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[Red]

All you need is a small microchip production plant as a side business then the whole house HAS to be clean. Instant & complete write off. Let me know if there's any other problems I can solve for you, good sir.

*dusts off shoulder

 

[Russ H]

Hak, aren't you the guy who has a stripper pole in his mancave? (apologies if I'm remembering wrong here).

Must be a way to write that off, too . . . hmm . . . perhaps rentals to 'subcontractors'? :smxB:

-Russ H.

 

[hakrjak]

Hak, aren't you the guy who has a stripper pole in his mancave? (apologies if I'm remembering wrong here).

Must be a way to write that off, too . . . hmm . . . perhaps rentals to subcontractors?

-Russ H.

I thought about it for awhile, but then I ended up married and boring -- haha... I think you're thinking of Steve O?

- Hakrjak

 

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[jbar]

Same situation here. Work from home with 2 home offices. My accountant says not to worry about small things like that as they are red flags for audits.

 

[bflbob]

Same situation here. Work from home with 2 home offices. My accountant says not to worry about small things like that as they are red flags for audits.

Depends on the situation. If you are missing out on $5,000 in legitimate home office deductions at a 40% combined tax rate, then your accountant should have bigger things to worry about than an audit.

I used to fear audits. Now they are just part of doing business. Of course, I don't cheat. If you are hiring your 3-year-old to clean, you might want to avoid that audit.

 

[hakrjak]

Depends on the situation. If you are missing out on $5,000 in legitimate home office deductions at a 40% combined tax rate, then your accountant should have bigger things to worry about than an audit.

I used to fear audits. Now they are just part of doing business. Of course, I don't cheat. If you are hiring your 3-year-old to clean, you might want to avoid that audit.

I fear audits for the pain in the a$$ more than anything. It seems like nobody you talk to really can tell you what to expect. Maybe we should start a seperate thread on this so we can get an idea of what they are like. *light bulb* -- I'll do that now.

- Hakrjak

 

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