Housekeeper: Self-employed or Employee

Hi June,

Great website!

I stumbled upon your site while looking for cases similar to the one my mother-in-law is currently undergoing with the Social Security Administration.

She is a 71-year-old widow, who after losing her job in 2003 started to provide cleaning and cooking services to households in our neighborhood to earn (profit) and to pay self-employment taxes, in part, needed to earn the remaining eight credits to avail of her social security benefits.

Social Security has denied her benefits because they've stated that her tax returns (2004-2006) should've been filed as a wage earner instead of self employed.

My question: what constitutes a self employed person? Surely you cannot expect (as in her case) to request a W-2 from each household she services. I've pointed out to them that the IRS didn't seem to have a problem with her filing status. Is there a clear-cut definition of a self employed person? Please advise.

Thank you, Vic (Helpful Son-in-law)


Hello Vic,

Glad you like my site. Thanks for letting me know.

Whether your mother-in-law was an employee or self-employed is determined by who controlled the work she did.

If she --
1. offered her services to the public -- not one family only
2. determined the hours and/or days she worked
3. could quit customer whenever she wanted and not suffer financial ruin -- --meaning she could get another client very easily
4. generally used her own cleaning supplies and equipment.
5. had a business card that she handed out to potential clients
-- then she is well on her way to proving that she was self-employed.

There is more info in my website column: It's all about relationships: Are you an employee or are you self-employed? And there is even more info in my book, Self-employed Tax Solutions.

You don't say what state you are in, but here's a a good recap that Pennsylvania has on household workers.

After you've done some reading and you determine that she was an indie rather than an employee then start making calls --- to your state department of labor, the IRS, and a different person or office at the Social Security administration.

Also, be aware that if someone works as a housekeeper or nanny for a family an hourly fee or weekly wage, that person is an employee of the family. The family must set up a payroll, pay payroll taxes, and file all payroll forms including a W-2. You may have heard of the "nanny tax" and all the trouble it has caused many people.

I wish you the best!
June