Our housekeeper does not work when we are home due to COVID-19. We still pay you. Could we treat those payments as a “gift” to reduce your income tax?

When will I receive my stimulus check? I’m one of the 35 million people waiting, and I sent in my 2019 tax return this month

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Dear Moneyist: Due to the 2020 global pandemic, my wife and I have been concerned about exposure to others indoors. We are lucky to be able to work from home, so we are always here and no one else is allowed in our home.

Because of this, we have tried to make arrangements to be out of the house when our housekeeper comes to clean. This is not always possible, so during the year we asked him not to clean our house on the days we were at home. Understanding that times are tough, we have continued to send you payment for the weeks we asked you to stay home. My question is this: because we gave you money but no work was done, should you consider this income or a gift? While it doesn’t change my taxes at all, it would definitely affect hers. Would it help if I provided you with a statement of all payments and which ones were for the actual cleaning, along with a letter stating our position that the others were gifts? Willing to do the right thing and the smart thing You can email The Moneyist with any financial and ethical questions related to the coronavirus at qfottrell@marketwatch.com Dear Willing: When so many domestic workers are losing money during the pandemic, I want to thank you for recognizing your housekeeper’s financial needs by paying her and exploring ways to gift her money. Others are struggling to pay their housekeepers during this time. Many domestic workers are undocumented and ineligible for unemployment. You are lucky because you are healthy and can afford to pay your housekeeper, and you are considerate because you choose to do so. I sought the expertise of Bill Smith, Managing Director of the National Tax Office at CBIZ MHM, a provider of financial, tax and business consulting services. Assuming you are a W-2 employee: “This is most likely all considered salary, because the person still controls the employee,” she says. “The domestic worker is paid to remain under your control as an employee. Because she has to wait and hang around until they release her, it’s the equivalent of work. ”

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“Is your housekeeper an independent contractor or a W-2 employee? ”

Internal Revenue Service Publication 926 addresses this: “You have a domestic worker if you hired someone to do your domestic work and that worker is your employee. The worker is your employee if he can control not only what work is done, but how it is done. If the worker is your employee, it does not matter if the job is full or part time or if you hired the worker through an agency or from a list provided by an agency or association. “The agency gives this theoretical example:” You will pays Betty Shore to take care of her son and do light housework 4 days a week at her house, “she says.” Even if the employer wants to cut down on the worker’s time and give her a beautiful holiday gift, the result it’s probably the same. The IRS will likely see the gift as payment for not looking for another job because your time was cut, which is the equivalent of paying you for waiting time. ” It’s part of taxes, part of the philosophy of logic. That’s the IRS! What if you are an independent contractor? If you donate $ 600 in a fiscal year, you must submit a Form-1099-MISC. “If only the worker can control how the work is done, the worker is not his employee but is self-employed. A freelancer generally provides their own tools and offers services to the general public in an independent business, ”says the IRS. As an independent contractor, your housekeeper can wear work clothes, fuel / mileage, and cleaning supplies. Thank you for continuing to employ your housekeeper and for finding ways to make your life easier, even if it doesn’t affect your own finances. Your willingness to ease the financial burden on your housekeeper is an act of goodwill in itself. The German philosopher of the Enlightenment Immanuel Kant wrote: “A good will is good not because of what it does or achieves, not because of its fitness to achieve some intended end, but good simply because of its will.” The Moneyist: When my parents died, my sisters and I divided their estate. I chose a painting that can be worth $ 50,000. Should I tell them? Hello MarketWatchers. Check out Moneyist’s private FB Facebook group, + 0.04%, where we search for answers to life’s thorniest money problems. Readers write to me with all kinds of dilemmas. Post your questions, tell me what you want to know more about, or rate the latest Moneyist columns.