[TheBeardedWelder]

Not sure if this goes here but here we go..


I am getting paid under the table. My employer is giving me a check. No deductions. Whats the best way to keep most of my money? Any good loop holes? Advice? I live in Massachusetts.

Thanks!

[Bill Beauregard]

Put your head between your knees.

[MinnesotaDave]

Not sure if this goes here but here we go..


I am getting paid under the table. My employer is giving me a check. No deductions. Whats the best way to keep most of my money? Any good loop holes? Advice? I live in Massachusetts.

Thanks!

Where I live, that's not an employer. Call your tax person and ask what to do.

My tax lady always knows what I'm doing right or wrong off the top of her head.

[Poland308]

In Iowa that would make you a subcontractor. You would have to pay the corisponding rate that your total income puts you in. If he or she is writing you a business check and not a personal check you can be sure he’s reporting it as a business deduction. I personally keep track of how much I get paid even for cash jobs. I pay in enough payroll taxes from my regular job that I don’t have to worry about paying in. Plus if I ever get audited I don’t have to worry.

[Artie F. Emm]

To make this right, sooner or later somebody somewhere will pay employment taxes on your wages. Setting aside the morality arguments of not paying taxes, the biggest issue for you may be qualifying for social security when you retire or get too sick to work or injured (in a work related accident?). In order to qualify for SS, you need to pay in to the system for 40 quarters, a total of 10 years. If you work under the table for a long time without paying in, you may not get SS benefits.

It sounds like you're trying to do the right thing, and good on ya for that. If you go to IRS and say "I want to settle up" then they will charge interest (on the amount of back taxes) and penalties (for not paying). You may want to give your employer a heads up because if you are an employee then he owes IRS for employment taxes, along with interest and penalties, and if you go get yourself squared away then eventually they will go looking for him. Or you may not want to tell him, if you think he'll get mad and fire you. Eventually he will start getting audit letters from IRS, so you may want to have a plan for that part of it.

I've tried to be as neutral as possible with this post and only give facts, so apologies for sounding preachy or heavy-handed. It's safe to say, though, the longer these taxes go unpaid, the worse it hurts to make it right. Have you been working at this job for a long time?

[rick9345]

RTFM -is_ right , even cash payments reportable, be a subcontractor,any account will show that nearly all your expenses related to work will/can be used to reduce your tax liability. Just make sure you pay into SS for the future. Both you and employer will be happier in the end. Schools, roads.fire dept,SS, etc are all something one uses, the cost comes from something called taxes/fees.

[Artie F. Emm]

Thinking on it a bit longer, the easiest and cleanest way out may be to get a new job where they do take proper deductions. If current boss says Why are you leaving? you can tell him "because i want to go clean and it'll cause grief for you". If the job interviewer asks Why do you want to leave your employer? you can tell him "because I'm getting paid under the table and that's not right for me" because you want SS and worker's comp insurance.

That avoids a long and complicated (and likely, expensive) entanglement with IRS and doesn't mess with boss man's program.

[Artie F. Emm]

^^^Just for the record, I'm not pleased with that post. I offered it as one way to leave a tough situation without making it worse for everyone involved.

[MinnesotaDave]

One of my friends had an "employer" like this.

Turned out the guy didn't pay any of the stuff he's supposed to for 10 years.

He got a massive 6 figure $$ penalty and cut wages drastically to pay it.

The crew quit and moved on. He tried to stay but got overworked and quit too.

[cj737]

If your employer writes you a check with no deductions made, you’re treated as a 10-99 employee. That puts the entire tax burden on YOU to report, file, and pay all associated taxes.

A couple of issues with this:
-If you only work for that employer, that employer must treat you as an employee, not a contractor. (Recent change in tax law)
-You should create for yourself a business, Federal Tax ID, and insure yourself. These help you immensely legally, and tax-wise as you can deduct most of your expenses from your income.
-Not reporting income creates a financial challenge for you should you ever need a loan. You have no income or tax history, or are under-reporting your income. That makes your less appealing, less qualified.
-Without being an employee, not great options for health insurance. This is a dangerous industry, and you NEED medical coverage, and should also have Short and Long Term Disability coverage.

So you really need to figure out how your employer is reporting the monies he’s paying you then respond accordingly for yourself. There’s no requirement to leave, just establish your own license and run your own taxes. This also establishes you as a legitimate business where you can purchase goods for less, perform other work legally on the side, and avoid any restrictions from your employer on new jobs.

[homeboy]

I had an employee whose father was an accountant. The way he set it up was for the employee to give me an invoice each week for the amount of his wages which I paid as a subcontractor with no deductions. They must have figured out it was worth it with the dedutions and whatever. For myself I was self employed for many years and paid into the CPP( Canada Pension Plan) myself and am now collecting no problem. As others said check with a good accountant and this may possibly work in your favour.

[TheBeardedWelder]

Great help thanks!!

This is a side gig for some extra cash tbats it. Just not sure how to handle it. But i do now. Thanks..

I just bought a olane ticket to mexico. Its been real guys..!!

jk

Thanks!

[cj737]

Trade that ticket in for one to Panama. US has extradition with MX

[Warrenh]

I would like to know what the "morality" compenent is in paying taxes. I really dont understand that statement.

Sent from my SCH-I545 using Tapatalk

[Poland308]

Some people feel that not paying your legally required portion of taxes is a display of poor moral character.

[Farmwelding]

Some people feel that not paying your legally required portion of taxes is a display of poor moral character.

If they wanted you to pay your fair share of taxes they wouldn't have made deduction, exclusions, and exceptions. I make a pretty decent chunk of change every year but as far as the IRS knows I haven't made a dime. Cash and checks under $600 keep things under the radar pretty easily.

[Poland308]

Some people feel that not paying your legally required portion of taxes is a display of poor moral character.

If they wanted you to pay your fair share of taxes they wouldn't have made deduction, exclusions, and exceptions. I make a pretty decent chunk of change every year but as far as the IRS knows I haven't made a dime. Cash and checks under $600 keep things under the radar pretty easily.

I said LEGALLY REQUIRED. What you do when you think no ones looking, also reveals a lot about a person as well.

[Antorcha]

Some people feel that not paying your legally required portion of taxes is a display of poor moral character.

Those people are the same idiots that have no clue, whatsoever, what they pay to have done...........Flag waving nitwits unwittingly paying to slaughter brown people and pay dictators off for the puppet govt(s) their masters control so corps can have access to the natural resources therein.
I know. That tharza sum komplificated English stuff but I felt it was needed

[Poland308]

I don’t disagree that not all tax money is spent well. But I don't make those descisions. I can only hope that those who do are held responsible for there moral character.

[Louie1961]

This is a side gig for some extra cash thats it. Just not sure how to handle it. But i do now. Thanks..

If it is a side gig and you WANT to be paid under the table (that's up to you to decide) then be sure he pays you only in cash. If there is a check, then there is an audit trail, and sooner or later you may get bit on the arse by the tax man. If he pays you in cash, it is still illegal for you to not report it on your income taxes, but so long as you don't deposit it in your bank, there is much less of a trail for the tax man to follow. You have to decide the morality of it for yourself, as well as decide how much legal risk you want to bear. But millions of self employed people keep some amount of cash receipts off the books.

[cj737]

Those people are the same idiots that have no clue, whatsoever, what they pay to have done...........Flag waving nitwits unwittingly paying to slaughter brown people and pay dictators off for the puppet govt(s) their masters control so corps can have access to the natural resources therein.
I know. That tharza sum komplificated English stuff but I felt it was needed

I see now that CK Louis has lost his career, you're stepping right up to fill the humor void. Well done, I needed a hearty laugh today.

[LanceR]

My first question would be "Are you getting paid as if you were an independent business working in the same field?"

I have never been involved in the welding business except as an observer but was the owner of a construction business for many years. One rule of thumb in the work we did was that we had to be billing roughly 2-1/2 times what we were paying in wages for a residential worker and perhaps as much a 4 times as much for commercial or industrial construction in some cases.

And it doesn't necessarily include tools (you have to bill somewhere for acquisition, wear and maintenance, too), trucks, expendable supplies not individually billed etc. A worker on the custmomer's site making $25/hour will generally be billed out at at least $60/hr might well be getting billed out at $150-160 depending on the situation when all is said and done especially for service call work.

Now, if the work is in a common employer owned workplace the labor to billing rate is still likely going to be in the neighborhood of 2 to 2-1/2 times the direct payroll cost.....

From my experience the only reason an "employer" pays under the table for more than a one-off side job is because they keep more of the money that should have gone into your pocket or have been spent to protect you. (liability, workman's comp and unemployment insurance, Social Security taxes, pension, payroll accounting etc). And there is no good excuse for ongoing payments off the books if the "contractor" doesn't have an established business identity as required locally. Even if he doesn't give you an IRS 1099 at the end of the year you are obligated to file your taxes and meet the other requirements of being in business.

One thing I'm unclear of is whether the work you are doing is related to the day to day type of business your "boss" is in or if it is a short term and temporary thing. If the former and you are not getting paid 2-4 time what his "over the table" help is getting you are being taken advantage of, especially if what you are doing involves a high degree of risk or liability.

As always this is my $0.02 and other may feel differently but my take is that if this is a recurring thing you should be giving him a periodic itemized invoice and he should be giving you an IRS 1099 at the end of the tax year. Right now you are almost certainly being severely underpaid, have a lot of personal exposures related to liability, taxes (business income, sales tax, SS tax, workman's comp, personal income tax), licensing (jurisdiction dependent) and he's pocketing the difference......


Lance