Home Office Cleaning Deduction
If you hire a cleaning professional to maintain the tidiness of your home office, a portion of their wages could be counted toward a home-office cleaning deduction. Here are some general guidelines to consider:
Exclusive and regular use:
To qualify for a home-office deduction, you must use a specific area of your home exclusively and regularly for business purposes. This means that the space is primarily used for conducting business activities and not for personal use. If your cleaning professional maintains only the area used for your home office, you may be able to include a portion of their wages as part of your home-office deduction.
Directly related to the business:
The cleaning services provided should be directly related to the maintenance and upkeep of your home office. This includes tasks such as cleaning the office space, emptying trash, dusting, and other maintenance activities specific to your office area.
Proportionate allocation For Home Office Cleaning Deduction:
Since your cleaning service is likely responsible for cleaning other areas of your home that are not part of your home office, you’ll need to allocate a proportionate share of their wages specifically to the maintenance of your office space. This can be calculated based on the square footage of your home office in relation to the total square footage of your home.
Home Office Cleaning Deduction Documentation and records:
It’s important to maintain accurate records and documentation to support your home-office deduction. Keep records of the services provided by your cleaning professional, including invoices, payment receipts, and any agreements or contracts outlining the services and their associated costs.
You have an ofﬁce in your home that qualiﬁes for the home-ofﬁce deduction. You’ve hired Jacob, a cleaning professional. He cleans your entire home, including your home ofﬁce.
You pay Jacob $350 every two weeks. Thatʼs $9,100 for the year.
Assuming your ofﬁce is twenty percent of your home, 20% of $9,100.00 paid to Jacob would be for cleaning your home office. That’s $1,820.00 in this scenario.
Two Important Questions
- For office cleaning, do you pay Jacob on a W-2 or a 1099?
- For home cleaning, do you have to pay the “nanny tax”?
Independent Contractor or Employee?
The answers to both questions depend on whether Jacob is an independent contractor or an employee. Here are some determining factors:
- Jacob self-manages.
- Jacob provides his own equipment.
- Jacob cleans several houses for various clients.
Jacob’s situation has the characteristics of an independent contractor. He self-manages, sometimes he cleans when you are not home. Jacob’s autonomy makes the case strong for classifying Jacob as an independent contractor.
Jacob arrives with all the needed equipment and supplies for his work. This gives you more evidence that further validates Jacob’s status as an independent contractor.
Jacob does not have an exclusive contract with you or any of his clients – which underscores his freedom, as an independent contractor.
Answers to the Questions
Jacob is an independent contractor for both his ofﬁce cleaning and house cleaning services. For the $1,820 you paid him to clean your ofﬁce, you’ll need to give him a 1099-NEC.
Additionally, you are not liable for the nanny tax because Jacob is an independent contractor with respect to cleaning your home.
Failing to File the 1099-NEC
If you do not ﬁle the Form 1099-NEC, you could be liable for an intentional disregard penalty of $570 or more for each failed 1099-NEC.
Consult a professional:
Home-office deductions can be complex, and the specific rules and regulations can vary. Information and scenarios provided in this article are not intended to override professional counsel. If you have a home office and want to capitalize on all related deductions and credits, schedule a free consultation to see what’s available for your unique circumstance.