Is Paying a Housekeeper Tax Deductible?

The costs of hiring a housekeeper for your personal residence are not tax-deductible, as the IRS considers this a personal expense similar to groceries or clothing. However, exceptions exist that can allow for a deduction or a related tax credit. These apply in specific circumstances related to using your home for business, having a documented medical need, or paying for the care of a child or dependent.

Deductible Scenarios for Housekeeping Expenses

Business Use of Your Home

You can deduct a portion of your housekeeping costs through the home office deduction. If you use part of your home exclusively and regularly for business, you can deduct the business percentage of home expenses, including cleaning. The “exclusive use” test requires a specific area of your home be used only for business, while the “regular use” test means you use the space on an ongoing basis.

To calculate the deduction, determine the percentage of your home used for business. The standard method is to divide the square footage of your office by the home’s total square footage. For example, a 200-square-foot office in a 2,000-square-foot home results in a 10% business use, allowing you to deduct 10% of your housekeeping fees. This logic also applies to space used for storing inventory or product samples.

This deduction extends to rental properties. The costs of cleaning and maintenance for a rented space are considered business expenses. These are fully deductible against your rental income and reported on Schedule E, including routine cleaning between tenants.

Medical Expense Deduction

Housekeeping services can sometimes be claimed as a medical expense, but this is not available for general cleaning. To qualify, the services must be prescribed by a physician to treat a specific medical condition. For example, a doctor might certify that a patient with a severe allergy or compromised immune system requires a professionally cleaned environment.

The services must be primarily for nursing or medical-related care. If a caregiver is hired for a chronically ill person and performs medical duties like bathing or administering medication, those costs are deductible. If that same caregiver also does light housekeeping as an incidental part of their duties, the entire payment may qualify. However, if you hire someone solely for cleaning to improve general well-being, those costs are not deductible as a medical expense.

This deduction is limited, as you can only deduct total medical expenses that exceed 7.5% of your Adjusted Gross Income (AGI).

The Child and Dependent Care Credit Alternative

You may be able to claim the Child and Dependent Care Credit for housekeeping expenses, which reduces your tax liability directly. This credit is available if you pay for household services to enable you and your spouse to work or look for work. The care must be for a qualifying child under 13 or for a spouse or dependent incapable of self-care.

The expense’s primary purpose must be the well-being and protection of the qualifying individual. The cost of a cleaning service alone does not qualify. However, if the person providing care, such as a nanny or housekeeper, also performs household chores as part of their duties, their services can be included as a qualifying expense.

For example, if a nanny’s duties include light housekeeping incidental to childcare, the entire payment can be considered for the credit. The key is that the housekeeping tasks are incidental to the primary role of providing care. You cannot include payments to someone who is primarily a gardener or chauffeur. The credit is a percentage of your work-related expenses, with a maximum limit of $3,000 for one qualifying individual and $6,000 for two or more.

Understanding Your Household Employer Obligations

Employee vs. Independent Contractor

You must correctly classify the person working in your home as either an employee or an independent contractor. The distinction is based on your degree of control over the work. If you dictate what work is done and how it is done, such as by providing supplies and setting a schedule, the worker is a household employee.

A worker who provides their own tools, serves the general public, and controls their own schedule is an independent contractor. For instance, if you hire a cleaning company, you are paying the company, not an employee, and do not have household employer duties. Misclassifying an employee can lead to penalties and back taxes.

Household Employment Taxes (“Nanny Taxes”)

If your housekeeper is a household employee, you become a household employer with tax responsibilities known as “nanny taxes.” If you pay a household employee cash wages of $2,800 or more in a year, you must pay FICA taxes. FICA includes Social Security (6.2%) and Medicare (1.45%), and you are responsible for remitting the combined employer and employee share of 15.3% to the IRS.

You may also need to pay federal unemployment tax (FUTA) if you pay total cash wages of $1,000 or more to household employees in any calendar quarter. The FUTA tax is 6% on the first $7,000 of wages per employee, though you may receive a credit for state unemployment taxes paid. While withholding federal income tax is not required, your employee can request it with a Form W-4. To manage these obligations, you must obtain an Employer Identification Number (EIN).

How to Claim the Deduction or Credit

For business use of your home, claim expenses on Form 8829, and the resulting deduction is then transferred to your Schedule C. For rental properties, report the full cleaning expense for the rented unit directly on Schedule E.

If housekeeping costs qualify as a medical expense, the deductible amount is reported on Schedule A, Itemized Deductions. These expenses are combined with your other medical costs, and the total is deductible only to the extent it exceeds 7.5% of your AGI.

The Child and Dependent Care Credit is claimed using Form 2441. You must provide the care provider’s information, including their name, address, and taxpayer identification number. The form calculates the allowable credit based on your income and expenses.

If you paid household employment taxes, you must report them by filing Schedule H with your Form 1040. This form calculates the total Social Security, Medicare, and FUTA taxes owed for the year, which is then added to your overall tax liability.