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Level 2

Executive Asst did some personal Asst work so not to get laid off

My executive assistant ended up doing a lot of personal assistant work during the pandemic. About 30% of their time, they didn't work any overtime. They were happy to get the work and we really needed the help at home. We kept them on the "company" books (for payroll), I am a sole-proprietor (Schedule C). In terms of taxes, do I just lower their salary expense against the business? or do I need to do something else.
I didn't get any PPP$. 
2 Replies
Expert Alumni

Executive Asst did some personal Asst work so not to get laid off

You can take the actual amount you paid her to work in your business on Schedule C (or other like form). You would issue her a W-2 as a household employee if she meets the following conditions. 


 You must file Form W-2 for each household employee to whom you paid $2,200 or more of cash wages in 2020 that are subject to social security and Medicare taxes.


If you paid your employee $2,200 or more in 2020, you should withhold and pay Social Security and Medicare on all of her wages. If you paid your nanny $1,000 or more in a quarter in 2020, you must pay the federal unemployment tax, or FUTA. (You may also owe state unemployment taxes.)


Generally, for 2020 an employer needs to pay Social Security and Medicare taxes for “cash wages” of $2200 or more paid to any one employee. Cash wages refer to checks, money orders and the like. They don’t include “the value of food, lodging, clothing, transit passes and other noncash items you give your household employee.” But cash given to an employee in place of those items counts as cash wage.

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Opus 17
Level 15

Executive Asst did some personal Asst work so not to get laid off

For a schedule C business, you and the business are one in the same.  The easiest thing to do would be to simply pay the person as an employee of the business regardless of the work they were doing.  For a schedule C business when you are the only owner, it doesn’t matter that you are paying them to also perform personal services.


If this is a partnership or this was some other kind of business where it was important to divide the profits between several owners, then the other owners might be annoyed if you were using company funds for personal services. But that is more of a business ethics issue than an income tax issue.  If you want to pay the person separately for their personal service work, then they would probably be your household employee and you would need to issue a W-2 as a household employer for the personal services along with a separate W-2 for the business. Household employee tax is the employer share of Social Security and Medicare in this case.  But it seems like a lot of trouble that you probably don’t need to go through.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
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