What is clear is that there are several important laws and financial rules for stay-at-home spouses. Enmeshed in complicated government regulations, many homemakers are not aware of how their no-paycheck status impacts whats in their wallet today and their future financial security.
“They just dont know their rights,” says Amy Matsui, senior counsel with the National Womens Law Center.
For stay-at-home spouses, who work around the house but don’t get paid, here are some money rules to keep in mind.
Hey there, family! If you’re a stay-at-home mom juggling a million things, you might be wondering, “Do I need to file taxes?” It’s a valid question, especially if you don’t have a regular paycheck like a 9-to-5 job. I’m going to tell you the short answer: it depends on whether or not you made money and how much. Please don’t worry; we’ll get right to the point so you don’t have to scratch your head.
At our lil’ corner of the internet, we know taxes can feel like a big ol’ mess, specially for folks like homemakers who might not think of themselves as “earners.” Stick with me, and I’ll walk ya through when you need to file, when you don’t, and some sneaky ways you might even save a buck or two. Let’s get crackin’!
What Even Counts as a Homemaker?
Before we get into the tax jazz, let’s make sure we’re on the same page. A homemaker is someone who manages the home—think cookin’, cleanin’, raisin’ kids, or carin’ for family members. You might not get a paycheck for it, but damn, it’s work! Some of y’all might also have side hustles or get paid for stuff like family caregiving. That’s where taxes sneak in.
The Big Question: Do You Gotta File?
Here’s the deal right off the bat If you’re a homemaker with no income, you prob’ly don’t need to file a tax return. But if you got any kinda money comin’ in—whether it’s from a side gig payments for carin’ for a loved one or even some random cash here and there—you might need to. The IRS don’t care if you call yourself a “worker” or not; they care if you got taxable income.
Let’s break this down with some real-talk scenarios
- No Income at All: If you’re just managin’ the house and ain’t got a dime comin’ in, you’re likely off the hook. No filing needed.
- Small Side Money: Sold some crafts on Etsy or did a lil’ babysittin’? If it’s under a certain amount (more on that soon), you might not file, but you still gotta report it if it’s over the limit.
- Payments for Family Care: If you’re gettin’ paid by insurance or a state agency to care for a spouse or relative, that might not count as “self-employment,” but you still report it.
- Full-on Side Hustle: Run a lil’ biz from home, like a daycare or freelance stuff? Yeah, you’re prob’ly on the hook for filing and maybe even self-employment tax.
What’s This “Income” Thing Anyway?
Let’s talk about what the tax people mean when they say “income.” ” It ain’t just a salary. Here’s the types you might have as a homemaker:
- Earned Income: Money from work, like freelance gigs, side jobs, or a small biz you run from the kitchen table.
- Unearned Income: Stuff like interest from savings, dividends if you got investments, or even alimony in some cases.
- Payments for Care: If you’re carin’ for a family member and gettin’ paid by an agency or insurance, that’s income too, even if it don’t feel like a “job.”
The IRS got thresholds—fancy word for limits—on how much you can make before you gotta file. These change based on your age, marital status, and if you got kids or not. I’ll toss a lil’ table below to keep it straight.
Filing Thresholds for 2023 (Just a Guide, Check the Latest!)
| Filing Status | Age | Income Threshold |
|---|---|---|
| Single | Under 65 | $12,950 |
| Single | 65 or older | $14,700 |
| Married Filing Jointly | Both under 65 | $25,900 |
| Married Filing Jointly | One 65 or older | $27,300 |
| Married Filing Separately | Any age | $5 |
Note: These numbers shift yearly, and if you got dependents (like kiddos), it might change things. If you’re close to these limits, double-check with the IRS or a tax buddy.
Special Cases for Homemakers: Family Care and Side Gigs
Now, let’s chat about some unique situations us homemakers might face. I’ve seen plenty of folks get tripped up here, so pay attention!
Carin’ for Family Members
Many stay-at-home moms take care of loved ones, like an elderly parent or a disabled spouse. Sometimes insurance or a state program will pay for it. Here’s the scoop:
- If you ain’t runnin’ a caregiving biz and just helpin’ out your spouse or kid, that money usually don’t count as “self-employment.” You don’t pay self-employment tax, which is a lil’ win!
- But, ya still gotta report that cash as income on your tax return. It goes on a specific line for “other income,” not as biz earnings.
- Now, if you’re carin’ for multiple folks or runnin’ a legit caregiving operation from home, that’s different. You might owe self-employment tax ‘cause it looks like a biz to the IRS.
Real example: Say I’m takin’ care of my husband after an accident, and insurance sends me a check. I report that money, but I ain’t gotta pay extra taxes on it as a “business” since I’m not doin’ this for anyone else. Make sense?
Side Hustles and Hobbies Gone Wild
Plenty of homemakers got side gigs. Maybe you bake cookies for neighbors or sell handmade stuff online. Here’s where it gets sticky:
- If your hobby makes money, even a lil’, it’s income. Under a certain amount, you might not file, but if it’s regular cash, the IRS wants to know.
- If it turns into a full-on biz—like you’re slingin’ baked goods every weekend—you’re likely considered self-employed. That means filin’ a special schedule for biz income and payin’ self-employment tax (think Social Security and Medicare).
- Pro tip: Keep track of what you spend on this gig. Ingredients, supplies, even mileage to deliver stuff can be deducted if it’s a biz. Don’t sleep on that!
Why File Even If You Don’t Owe?
Here’s a lil’ secret I’ve learned over the years: Sometimes, filin’ taxes is worth it even if you don’t owe a penny. Why? ‘Cause you might get money back or qualify for credits. Check this out:
- Earned Income Tax Credit (EITC): If you got a small income and kids, this credit can put cash in your pocket. It’s like a lil’ thank-you from Uncle Sam.
- Child Tax Credit: Got kiddos under 17? You might snag up to $2,000 per kid, dependin’ on your income.
- Refundable Credits: Even if you don’t owe taxes, filin’ can get you a refund if you qualify for certain credits.
I’ve seen folks skip filin’ ‘cause they think, “I don’t make enough to owe.” But then they miss out on hundreds, sometimes thousands, of bucks. Don’t be that person!
What Happens If You Don’t File When You Should?
Alright, let’s talk consequences ‘cause I ain’t gonna sugarcoat it. If you got income over the threshold and don’t file, the IRS can come knockin’. Here’s what might go down:
- Penalties: They slap ya with fees for not filin’ on time. It’s usually a percentage of what you owe, and it adds up quick.
- Interest: If you owe taxes and don’t pay, interest piles up on that debt. It’s like a credit card bill from hell.
- Missed Refunds: If you don’t file, you can’t claim refunds or credits. Some got time limits—wait too long, and that money’s gone for good.
To be honest, a friend of mine didn’t file for a few years because she thought her small side job didn’t count. After getting a nasty letter from the IRS, she paid a lot more than if she had just filed. Don’t play that game!.
Tips to Make Tax Time Less of a Headache
I know taxes ain’t fun, but we can make it less painful. Here’s some tricks I’ve picked up:
- Keep Records: Got income from anywhere? Save receipts, bank statements, whatever. Even if it’s just a folder in your desk, it helps.
- Track Expenses: If you got a side hustle, write down what you spend. That stuff might lower your taxable income.
- Use Free Tools: There’s free tax software out there for simple returns. The IRS even got a free file program if your income’s low.
- Ask for Help: If you’re confused, chat with a tax pro or even a savvy friend. Better safe than sorry.
- File Jointly If Married: Often, filin’ with your spouse can save money or boost credits. Run the numbers both ways to see what’s best.
Common Myths About Homemakers and Taxes
I’ve heard some wild stuff about taxes over the years, so let’s bust a few myths right quick:
- “I don’t work, so I don’t file.” Nah, if you got any income, even from odd jobs, you might need to.
- “Caring for family ain’t taxable.” The payment might not be self-employment, but it’s still income you report.
- “I make too little to matter.” Even small earnings count, and filin’ might get ya a refund. Don’t skip it!
What If You’re Not Sure?
Still feelin’ lost? That’s okay. Taxes are a beast, and even I get a headache thinkin’ about ‘em sometimes. If you’re on the fence about filin’, here’s what to do:
- Check your total income against them thresholds I mentioned.
- Look at any forms you got, like 1099s for miscellaneous income or payments. They clue ya in on what to report.
- When in doubt, file anyway. It’s safer to file and owe nothin’ than to skip and get in hot water.
Wrappin’ It Up
So, do homemakers have to file taxes? Like I said at the jump, it depends on your income. If you ain’t got none, you’re likely good. But if you’re pullin’ in cash from side gigs, family care, or whatever, you gotta report it—and sometimes file a return. The good news? Filin’ might score ya some credits or refunds, and keepin’ records makes it way less stressful.
We’re all about helpin’ y’all navigate this tricky stuff at our blog, so don’t be shy—drop a comment if you got questions or hit up a tax pal to double-check your situation. Remember, you’re doin’ amazin’ work keepin’ the home fires burnin’, and a lil’ tax know-how just makes ya even more unstoppable. Let’s tackle this together, alright?
Getting a Credit Card
If you want to keep your personal spending separate, you cant do it with your own credit card. One of the consequences of the Credit Card Accountability, Responsibility and Disclosure Act, or CARD Act, of 2009, which aimed to bar issuers from supplying college students with credit by requiring that cards be issued only to those with income to pay the bills, was to also restrict homemakers who dont earn income on their own from getting their own card.
One CARD Act provision that went into effect Oct. 1, 2011, made it impossible for nonworking spouses without their own source of income to get a new credit card. It meant that a homemaker could only get a card through his or her spouse as an authorized user on a joint card.
These financial rules for stay-at-home spouses sparked the ire of many like Holly McCall, who partnered with the nonprofit group MomsRising to petition for signatures on its website and on Change. org to ask the federal Consumer Financial Protection Bureau to amend the law for nonearning homemakers.
Since October 2012, the CFPB has been pushing for changes to the new rules that would make it easier for spouses or partners who don’t work outside the home to get credit cards. The bureaus proposed revision would allow credit card applicants who are age 21 or older to rely on third-party income to which they have a reasonable expectation of access.
You rely on these retirement funds coming from your working spouse, but you could get a nasty surprise. A 401(k) account is often the biggest asset that couples have. The worker must get his or her spouse’s signature if he or she wants to name someone else as the account’s beneficiary. This is to protect that important source of retirement savings.
But if someone with a 401(k) changes jobs, that person can cash out the 401(k) without getting a spouses permission. The person also can roll the funds into an individual retirement account and name someone else as the beneficiary, Matsui says.
“IRAs are a huge problem,” she says. When someone sets up an IRA, there is no requirement that the spouse of the account holder be named as beneficiary or even that the spouse consents to the designation of other beneficiaries.
“After a spouse has died, the surviving partner has tried to stop the other named beneficiary from getting the IRA,” Matsui says. But spouses have no rights to the IRA except in a handful of states with community property laws when others, such as children from a prior marriage, have been designated as the IRA beneficiaries, she says.
Putting Money away for Retirement
You may not earn a paycheck, but you can put money away for retirement in your own name.
“It drives me nuts that so many women dont know that they could set up an IRA in their own name,” says Cindy Hounsell, president of the nonprofit Womens Institute for a Secure Retirement in Washington, D.C.
IRAs became available decades ago to help workers build tax-advantaged retirement savings, and so-called spousal IRAs are intended to provide homemakers who may not earn any outside income to be able to create their own personal IRAs, just like paycheck-earning workers.
As with other IRAs, in 2013 homemakers can contribute up to $5,500 annually — $6,500 if the homemaker is over age 50 — and the contributions can be deducted from the couples adjusted gross income, with some restrictions.
Its critically important for nonworking spouses to have funds in their own names, Hounsell says. “No one thinks they are going to get divorced.” But when it happens, many former spouses discover they have no access to retirement funds or that they have inadequate retirement funds.
Homemakers who dont earn an income for a prolonged period and then divorce will probably suffer in retirement because their own Social Security payout would be based on their interrupted and presumably low earnings history.
If you divorce after you reach your 10th anniversary, youll have a richer retirement. Social Security rules dictate that if a prior marriage lasted at least 10 years, the divorced spouse is entitled to a benefit of 50% of the exs benefits.
For instance, if a man files for Social Security at age 66 and receives a $2,000 benefit, his former wife could get $1,000 as long as the couple saw a 10th wedding anniversary. Divorced widows also are eligible to collect the spousal benefit if they were married 10 years, says Jim Blair, a former Social Security administrator who co-runs Premier Social Security Consulting.
“If you are married nine years and 11 months, you would get nothing,” Blair says.
If your spouse cheats on income taxes, you may not be liable if you prove your innocence. A homemaker who earns no income does not have to file his or her own separate income tax return but usually elects to file a joint return with the paycheck-earning spouse, says Paul Kohlhoff, law professor and supervising faculty attorney of the tax clinic at Valparaiso University Law School in Indiana.
The fact that a nonearning spouse jointly files will probably enhance the chances of getting “innocent spouse” relief in cases where the Internal Revenue Service is collecting on a fraudulent return, so long as the nonearning spouse was not aware of the fraud, Kohlhoff says.
The IRS originally came up with an “innocent spouse” rule to provide relief to a spouse who files jointly but was compelled by duress or lack of knowledge to sign off on a return that understated income or underpaid the amount owed, Kohlhoff says.
Its easier for nonworking spouses to be granted this relief since the IRS could argue “there was tacit consent,” if a working partner signed a joint return when she or he could file separately, Kohlhoff says.
Usually, a spouse is divorced or separated when he or she asks for relief from having to pay the amount owed. The IRS recently liberalized the rules, eliminating a two-year deadline from the time of the first collection for petitioning for relief. Still, nonworking spouses must prove that they were under physical or emotional duress or ignorant of the tax cheating to be granted this relief, Kohlhoff says.
Copyright 2013, Bankrate Inc.
Married Couples: To File Taxes Joint or Separate? I Mark Kohler
FAQ
Do stay at home moms have to file taxes?
Does a stay-at-home parent file taxes? As a stay-at-home parent, you can absolutely file taxes. Whether you are required to file a tax return depends on your income level. Based on how much you make, you may need to report any money you make from investment income, freelancing, or a side business.
Does my wife need to file taxes if she doesn’t work?
Spouses are never able to be claimed as dependents on your tax return, even if they are unemployed, disabled, or cannot work. When filing as married jointly, both spouses report their taxable income, tax deductions, and tax credits on the same tax return. Both parties are responsible for each other’s tax liability.
Is homemaker an occupation for taxes?
Enter whichever term best reflects your current occupation. Terms such as Student, Laborer, Self-Employed, Homemaker, Unemployed, and Retired are fully acceptable.
What are the IRS rules for housekeepers?
Federal income tax withholding You’re not required to withhold federal income tax from wages you pay to a household employee. However, if you agree to withhold federal income tax for your employee and they ask you to, you’ll need a filled-out Form W-4, Employee’s Withholding Certificate from them.