Taxes

[Tahgirl1]

I have been doing housework for a elderly woman for the last 7 months. She pays me with cash weekly. How can I file taxes as that being my income? What do I need to file or what does she need to file?

[AdamNe]

Hello @Tahgirl1  ,

Depending on the nature of the work (do you bring your own supplies? are you able to control what work is done and how it is done, or is that up to the woman you work for?), you are either considered a self-employed contractor or a household employee. You can read about the distinction here: https://www.irs.gov/businesses/small-businesses-self-employed/hiring-household-employees

If you are a self-employed contractor: 

If the woman you work for pays you more then $600 over the course of the year, she is required to file a 1099-NEC with the IRS on your behalf. If she does not, you are still required to claim the income as self employment income on your tax return. Keep in mind, you can deduct your expenses on this income if you are self-employed. 

If you are a household employee: 

If you are paid more than $2,300 for the year or $1,000 during any calendar quarter, your employer would have the requirement to withhold social security and medicare taxes from your wages, and also pay the employer portion of social security and medicare. She would file a Schedule H on her tax return. Then, she would be required to send you a W-2 at the end of the year. She would not necessarily be required to withhold income tax, so be aware that you may end up owing taxes if they were not withheld and paid throughout the year. Here is some information on tax requirements for household employees: https://www.irs.gov/taxtopics/tc756

[rjs]

If you are a self-employed contractor you have to report the income on your tax return no matter how little it is, whether or not you get a 1099-NEC. However, if this is your only income and the total is less than $400 for the year, you are not required to file a tax return.

If you are a household employee and you earn less than $2,300 in 2021, you can just report the income as household employee wages on your tax return. In TurboTax, type "household employee wages" (without the quotes) in the Search box, then click the link that says "Jump to household employee wages." The woman that you work for does not have to do anything if she pays you less than $2,300 in 2021.

The $2,300 threshold for household employee wages is adjusted for inflation each year. The $400 threshold for self-employment income does not change from year to year.