Is there any reason for concern if my maid, a legal resident, just asked permission to report her bi-weekly payments from me on her Section 8 income report?
August 29, 2007 6:40 AM   Subscribe

My maid called this evening to inquire as to whether she can include my bi-weekly payments to her in her Section 8 (Los Angeles) income report. She is a legal resident but not a citizen. Other than tax implications for her, are there any issues that I should be aware of now that this previously non-broached issue has been broached (e.g., tax or legal)? My options are as follows: (1) say no and let her continue working; (2) say yes and let her continue working; or (3) politely inform her that her services are no longer required. She has only been cleaning my apartment for two months and came highly recommended by a friend. Obviously option (2) is preferable but I’d rather be safe than sorry.
posted by anonymous to Law & Government (14 answers total) 1 user marked this as a favorite
If she's a legal resident, there shouldn't be any legal implications for you (but IANAL). As far as taxes, all the tax liability would be on her side - assuming she's not your employee (it sounds like she cleans other places too?), you have no further liability aside from paying her.
posted by chundo at 7:15 AM on August 29, 2007

I'm not a lawyer or an accountant, but I have been both a freelancer and a small business owner that employed cash labor for specific jobs (waiters, bartenders). It seems to me that your cleaning lady could be considered a independent contractor and not an actual employee. In that case, it's my understanding if you pay her less than $600 in a year, you don't have to report it. If it's more, you just have to issue her a 1099. It counts as income for her but does not require any tax, SSI or FICA witholding on your end.

Of course, failure to report does open you up to penalties if the IRS finds out about it. I'm not sure what the implications are for your past payments to her, but I would suggest consulting an accountant about issuing 1099s for her in the future.
posted by lemoncello at 7:17 AM on August 29, 2007

Also, by Section 8 are you referring to subsidized housing? She probably just needs proof that she's working (or trying to work) in order to continue to get subsidized housing. She was probably just being polite by asking permission first; it would be a bit mean to deny the request in that case.
posted by chundo at 7:19 AM on August 29, 2007

If you're afraid that you're not paying taxes (and will get in trouble with the law) may I suggest contacting a lawyer and taking reasonable precautions to ensure that you are, in fact, behaving legally?

Oh, and I see no reason to fire your maid just because you don't feel like paying taxes.
posted by sondrialiac at 7:33 AM on August 29, 2007 [3 favorites]

She's doing this to help you out in case you're not on the up and up. You should definitely keep her. If you have true worries about not be on the up and up, see a tax accountant. Maid service is relatively common, I haven't seen any special reporting requirements.
posted by geoff. at 7:53 AM on August 29, 2007

I get paid as a contractor. It's convenient for the payer and sucks for the payee (damn you self-employment tax!). Maybe you'd print out a little contract that makes explicit that she's a contractor and not an employee? You wouldn't want to get stuck with "employees" unintentionally. This would also be something that she can show to public housing people.
posted by a robot made out of meat at 7:54 AM on August 29, 2007

B. You do not have to pay taxes to independent contractors. If you hired a guy to come and retile your bathroom, there would be no reporting requirements. So long as she has other clients and its not a full-time position, you are fine.

If you are paying her through a company, then you have to issue a 1099 form.

In sum, if she's legal, an individual not a company is paying her, and its not her sole or full-time gig, you're cool.
posted by letahl at 7:54 AM on August 29, 2007

Also, by Section 8 are you referring to subsidized housing? She probably just needs proof that she's working (or trying to work) in order to continue to get subsidized housing. She was probably just being polite by asking permission first; it would be a bit mean to deny the request in that case.

If she has a Section 8 voucher, she is required to report her sources and amounts of income. (The rent she pays out of pocket is calculated using her income as a starting point.) If she does not report all of her income, and it is discovered, I'm pretty sure she could be evicted, sued, barred from public housing, and maybe prosecuted for fraud.
posted by qldaddy at 7:55 AM on August 29, 2007

And of course, you may want to consult your accountant to be sure.
posted by letahl at 7:57 AM on August 29, 2007

Easier to consult this article.
posted by CunningLinguist at 8:08 AM on August 29, 2007

The entity issuing the Section 8 voucher will require 3rd party verification of her income. If she reports the income from you, you will probably receive a letter or a phone call requiring that you verify the amount reported. If they catch you on the phone, the person doing the verifying will likely do nothing more than fill out a form to confirm the conversation and file it in her tenant file as income verification. It is highly unlikely there will be any crossover with the IRS in that process.
posted by chiababe at 9:12 AM on August 29, 2007

I am not a lawyer, but I am an affordable housing advocate and have worked with Section 8 recipients for the past 4 years (in Massachusetts, not in California). The Section 8 rules require that a person be under a certain poverty threshold to receive the vouchers, and pay 30% of their income for rent (the feds or your state housing agency pay the difference). If she reports this, and I assume it's HUD or the CA housing agency asking for the info from her, it will likely have no implications for you (they are not the IRS). It may, however, cause her to have to pay more of her monthly income to rent or, if it pushes her above the poverty level, to lose her voucher all together. But seeing as how she's a house cleaner in LA, I'd doubt that would happen.
posted by jk252b at 9:47 AM on August 29, 2007

Household employees are different than regular 1099 employees.

I don't know much about it, but if you end up paying her more than $1,500 per year, you may need to be filing a Schedule H.

Talk to your accountant, but part of filing Sch. H is figuring out what you need to be paying for her Medicare and Social Security taxes. Here's the IRS website explaining it. (Publication 926).
posted by small_ruminant at 9:52 AM on August 29, 2007

Agreeing that the Section 8 info will not likely find its way to the IRS.

However, SHOULD you get concerned about doing this properly vis-a-vis the IRS, if you are paying her more than $1400 a year. She's not a contractor, period. She's your employee and you need to be doing tax withholding, contributing to her Social Security, possibly funding worker's comp insurance. If you're telling her when, where and what to do, and giving her the tools and supplies, in the eyes of the IRS that makes her an employee.

The only way around this is if she is truly self-employed: has a business, brings her own tools, sets her own hours, does this for other people, etc. A little sham contract won't establish that. And if she is self-employed, and you pay more than $600 a year, you need to file a 1099 form (and she needs to file self employment tax forms).

More details. (It's obvious why these requirements are widely ignored by people who clean houses and the like. However, a person like this who does domestic work her whole life could end up getting zero social security as a result.)
posted by beagle at 10:04 AM on August 29, 2007

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