Can You Deduct Home Office Cleaning Services?

June 21, 2023
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Many people have home offices that may qualify for the home-office tax deduction. This is true if you run your primary business from home, work a remote/hybrid schedule or do freelance work on the side. You could be eligible for significant tax deductions. These tax rules have become increasingly important in the wake of the pandemic, as more people have been working from home in recent years.

Cleaning Your Office

One very important tax consideration with a home office is if you use cleaning service at your home. You might also be eligible for an extra tax deduction. Let’s say you pay someone $100 a week to clean your home, which includes your home office space. Your office takes up 15% of the home’s total square footage, which enables you to write off up to 15% of your mortgage, utilities and some other homeownership expenses.

You are paying the cleaning service $5,200 over the course of the year. If your office represents 15% of the property, then you are essentially paying $780 this year to clean your office. (15 percent of $5,200). You could be eligible for an additional tax deduction for this fee related to maintenance of your home office.

Important Tax Considerations

How you pay and employ the cleaning service may make a difference. If you are hiring a cleaning company and they send someone over, you should be able to get clear invoices and receipts for the services. If it’s just a cleaning lady (or guy) working on her own, then you will have some additional questions to address:

  • Do you pay her though a W-2 (as your employee) or through a 1099 (as an independent contractor) for the office cleaning?
  • Do you separate your payments to reflect cleaning the house vs. cleaning the home office space?
  • Do you need to pay the Nanny Tax for the home cleaning?
  • Can you make any tax claims at all if you are paying her under the table?

In most cases, the cleaning lady will be operating as an independent contractor or as part of a larger cleaning service company. She is cleaning the house without much direction and is providing her own supplies. She is also cleaning other houses when not at yours. If you are paying her directly and she is an independent contractor, you will want to provide her with a 1099-NEC form at the end of the year. You shouldn’t be liable for the Nanny Tax if she is an independent contractor. If she is part of a cleaning service company and you are paying them, then you can use your invoices/receipts as the basis for your home-office deductions.

Please remember that if you do fail to file a Form 1099-NEC in the case of an independent contractor, you could be facing an intentional disregard penalty of $630 for each missed item.

Making the Right Tax Decisions

It’s always important what you can and can’t deduct when it comes to home-office tax deductions. A cleaning service may be something else you can add to the deduction. You just have to be careful about how you do it based on the relationship with the cleaning person and their own tax status.

For help with all your business tax planning needs, contact Illumination Wealth today. Let our team get you the most out of your potential tax deductions and benefits.