My Sister Needs Advice...

[kristenrice]

...and I'm not sure where to direct her.

First, her husband has been employed by a small company (his best friend is his boss) for several years. My sister found out (recently) that they have not taken ANY federal taxes out of his checks....for the last 3 years! ((***EDIT: Oops...they *have* taken it out...they just never reported it to the IRS) My sister and her DH file their taxes separately and he never filed this year because they never gave him a W-2.

Today, she called me saying that her husband was on his way to the urgent care center with a probable broken finger. You guessed it...he did it at work. So, when he gets home, he tells her that his finger is shattered and he is having surgery on Wednesday to repair it. He also said that the nurse at the urgent care said this wasn't work related. Um, OK, the nurse at the urgent care is not the one who determines this. *HE* was supposed to tell her that it happened at work. Of course, his boss did not have any paperwork for him to fill out so no report of the injury was made. They're buddies, after all, what's $10,000 in medical bills between friends?

My sister is beside herself. She is the main breadwinner of the family and she is currently on maternity leave since she just had a baby 3 weeks ago. She is having gallbladder surgery in about 3 weeks too so this is devastating to her. They are covered under her medical insurance and, due to the baby, they have already maxed out their HSA for the year.

I'm not commenting on their relationship and I would appreciate it if that issue would be left out of it. Yes, obviously there are personal issues going on. I guess what I'm wondering is what can she do about this? (Because it doesn't look like he is going to do anything about it) She is definitely looking into retaining an attorney, but what type? I told her that his boss needs to be reported to the IRS immediately. I also told her that as far as I know, an injury that occurs while on duty at work MUST be covered by work comp. I believe that his employer is required to carry work comp insurance on him....especially since he works in CONSTRUCTION.

What would you do? (Again, please refrain from advice about their relationship...you'd be preaching to the choir)

 

[Disney Doll]

I would tell her to call an attorney.

She actually might need 2 attorneys...1 who specializes in tax law and one who specializes in workmen's comp.

She has 2 separate issues:

1. Federal income tax issues. If their state has a state income tax, she probably has issues with that as well. I am not sure what the situation would be for marrieds filing separately...hopefully, she won't take the fall for his tax woes, but the married part means she might.

2. Workmen's comp claim. If the broken finger happened at work, by what basis is the urgent care nurse deciding that it is not a workmen's comp issue? It most certainly is. If the husband is smart, he will file a report immediately, get copiesof the medical record from the walk-in which hopefully say something ot the effect of "Patient states a 50 lb. box fell from a shelf at work and landed on his finger causing injury" because then it's a workmen's comp claim. He needs to complete and injury report at work and start the comp. process. If he says he doesn't want to cuz they're "buddies", well then she should probably call a divorce attorney too, cuz so far, this guy isn't doing so hot in terms of having any concern whatsoever about his family and the situation he is putting them into.

 

[Janepod]

SHE can't do anything about it. HE has to talk to a worker's comp lawyer. (And probably the same lawyer can handle the tax situation.)

And yes, refraining from commenting on the relationship other than to say there is one in every family.

 

[okeydokey]

I'm not sure what recourse he has for the tax thing considering he didn't report that problem for three years. If he gets a pay stub it is also on him to be sure to be sure it is correct.

The injury should be totally covered unless he has been working under the table. Please tell me he is not a cash employee.

 

[happygirl]

SHE can't do anything about it. HE has to talk to a worker's comp lawyer. (And probably the same lawyer can handle the tax situation.)

And yes, refraining from commenting on the relationship other than to say there is one in every family.

He's going to have to do it, not her.

How did he not know that there was no taxes coming out of his check, didn't he not look at his paystub. Or do the math in his head? He might be in trouble just as much as the boss is for tax fraud or evasion whichever the case maybe.

 

[golfgal]

Ok, a couple things, if they maxed out their HSA-does that mean they put in the $6150 and used all of that? Also, just because they have maxed out their HSA doesn't mean they don't have coverage. What is their deductible and out of pocket max? If they have reached those, everything is covered at 100%.

The tax issues is huge and they need to report that. They also have to be prepared to pay their own back taxes. There is a good chance the boss doesn't carry work comp too...which will also devastate them financially because that would have helped pay for the medical stuff and lost wages. I am going to guess he doesn't have any disability pay either.

I'm curious why they filed separately though. It is rare that doing that is the best financially for a married couple, but not always.

Are they prepared that he won't have a place to go back to work next week or whenever they report the boss?

 

[sparklynails23]

I wouldn't be surprised if he was being paid off the books, in which case he will be in trouble with the employer.

 

[YodaGirl]

I'm not sure what recourse he has for the tax thing considering he didn't report that problem for three years. If he gets a pay stub it is also on him to be sure to be sure it is correct.

The injury should be totally covered unless he has been working under the table. Please tell me he is not a cash employee.

I wouldn't be surprised if he was being paid off the books, in which case he will be in trouble with the employer.

My thoughts, exactly.

From the information in the original post, it sounds as though he is being paid under the table.

 

[crashbb]

I wouldn't be surprised if he was being paid off the books, in which case he will be in trouble with the employer.

Do you mean in trouble along with the employer? Or do you mean that the employer is the one with an issue with the OP's brother-in-law?

I agree with the first interpretation, but am confused by the second.

 

[kristenrice]

I think my sister is rather embarrassed by what she's gotten herself into. She is an educated, college-graduate and he lived with his parents until he was 30. He never had to worry about any responsibilities because his mother took care of everything for him until he moved out. (Last I heard, mom still pays for his auto insurance). He's not a bad guy...he just has no life experience. He's is always polite and friendly and gets along with all of us at our family gatherings. It's just that he is more like one of the kids than one of the adults.

My sister, God bless her, knew all of this when they got married, but she naively thought that marriage would force him to grow up. Unfortunately, all it did was make her his "mother" now. She was a homeowner before they got married and his name is not on the deed or the mortgage on their house. She decided from the get-go that their finances would be kept separate. She has her own credit card and checking accounts which he has no access to. This was also the reason she has filed their income taxes separately.

Right now, I just want to support her and do whatever I can for her. I am a very hard-headed, strong-willed person and I am NOT afraid to speak my mind so it is very hard for me to keep my opinions to myself. I do have enough restraint to bite my tongue in the interest of keeping the peace in the family. I know that this is her battle, not mine, so it is not my place to do anything more than be there for her.

Thanksgiving will be interesting....

 

[happygirl]

I think my sister is rather embarrassed by what she's gotten herself into. She is an educated, college-graduate and he lived with his parents until he was 30. He never had to worry about any responsibilities because his mother took care of everything for him until he moved out. (Last I heard, mom still pays for his auto insurance). He's not a bad guy...he just has no life experience. He's is always polite and friendly and gets along with all of us at our family gatherings. It's just that he is more like one of the kids than one of the adults.

My sister, God bless her, knew all of this when they got married, but she naively thought that marriage would force him to grow up. Unfortunately, all it did was make her his "mother" now. She was a homeowner before they got married and his name is not on the deed or the mortgage on their house. She decided from the get-go that their finances would be kept separate. She has her own credit card and checking accounts which he has no access to. This was also the reason she has filed their income taxes separately.

Right now, I just want to support her and do whatever I can for her. I am a very hard-headed, strong-willed person and I am NOT afraid to speak my mind so it is very hard for me to keep my opinions to myself. I do have enough restraint to bite my tongue in the interest of keeping the peace in the family. I know that this is her battle, not mine, so it is not my place to do anything more than be there for her.

Thanksgiving will be interesting....

It must be hard to be married to someone you don't trust enough to put there name on your house or bank accounts

 

[TinkPirateMom]

In some states, once married the house belongs to the spouse as well regardless of whether or not only one spouse is on the mortgage.

 

[kristenrice]

My thoughts, exactly.

From the information in the original post, it sounds as though he is being paid under the table.

From what I understand, he gets a paycheck from the "company", so he is definitely not paid in cash. My sister said that they HAVE deducted his federal income taxes from his checks (according to his check stubs), but never reported his income or the deductions to the IRS, which is why he did not get a W-2...I'm not sure. I am pretty sure I wrote that wrong in my original post. I think this is why she has told me that they have "stolen" over $10,000 from him because they never reported the deductions. So, although he hasn't filed his taxes, *he* has paid them....but his "boss" apparently pocketed it. (Again, I am not 100% clear on all of the details, but that is the rough information that my sister gave me)

The part of it that sickens me the most is that my brother-in-law will defend his friend's actions, even at such a great expense to his wife and children. It's just so wrong.

 

[happygirl]

From what I understand, he gets a paycheck from the "company", so he is definitely not paid in cash. My sister said that they HAVE deducted his federal income taxes from his checks (according to his check stubs), but never reported his income or the deductions to the IRS, which is why he did not get a W-2...I'm not sure. I am pretty sure I wrote that wrong in my original post. I think this is why she has told me that they have "stolen" over $10,000 from him because they never reported the deductions. So, although he hasn't filed his taxes, *he* has paid them....but his "boss" apparently pocketed it. (Again, I am not 100% clear on all of the details, but that is the rough information that my sister gave me)

The part of it that sickens me the most is that my brother-in-law will defend his friend's actions, even at such a great expense to his wife and children. It's just so wrong.

Why didn't he ever ask for a W2, I think your sister need to kick him out and start over

 

[golfgal]

From what I understand, he gets a paycheck from the "company", so he is definitely not paid in cash. My sister said that they HAVE deducted his federal income taxes from his checks (according to his check stubs), but never reported his income or the deductions to the IRS, which is why he did not get a W-2...I'm not sure. I am pretty sure I wrote that wrong in my original post. I think this is why she has told me that they have "stolen" over $10,000 from him because they never reported the deductions. So, although he hasn't filed his taxes, *he* has paid them....but his "boss" apparently pocketed it. (Again, I am not 100% clear on all of the details, but that is the rough information that my sister gave me)

The part of it that sickens me the most is that my brother-in-law will defend his friend's actions, even at such a great expense to his wife and children. It's just so wrong.

Is it possible that he is officially a contractor for the company and not a W-2 employee? If this is the case he would get a 1099 not a W-2 and a company is not required to take out any taxes or have work comp on him. Many construction companies do this to avoid paying these things--but eventually get caught if they "look" like a W-2 employee (meaning they have set hours, etc.). Is it possible he got a 1099 at work and had no clue what it was and just tossed it (especially if he still has mommy paying his bills)?

 

[Swan4Me]

Is it possible that he is officially a contractor for the company and not a W-2 employee? If this is the case he would get a 1099 not a W-2 and a company is not required to take out any taxes or have work comp on him. Many construction companies do this to avoid paying these things--but eventually get caught if they "look" like a W-2 employee (meaning they have set hours, etc.). Is it possible he got a 1099 at work and had no clue what it was and just tossed it (especially if he still has mommy paying his bills)?

I agree. For several years that is how I was paid and I had to pay my estimated taxes quarterly-theya re in deep doo-doo

 

[kidzmom3]

I work in a hospital dealing with insurance claims. There are very few small construction firms that carry workmens comp for their guys. that's because they call the people who work for them independent contractors. Even though he may get " paid" from the friend, he may not be his employer.

 

[AndreaDM]

Why didn't he ever ask for a W2, I think your sister need to kick him out and start over

O please! You're ridiculous, from one post you can determine she should kick him to the curb, 3 weeks after she had a baby.


OP, my brother was in the same situation years ago, he ignored the taxes for a while but the IRS didn't ignore him, he had to pay a bunch of penalties and the back taxes, but you know what? It wasn't the end of the world, he's matured and moved on. Also, I'm guessing they might be counting your bil as an independent contractor, thus not having to pay into worker's comp. In that case he should have been issued a 1099 instead of a W-2. He needs to find that out ASAP, and he needs to gather up pay stubs and any documentation showing the taxes were indeed withheld. It's situations like this why I won't ever work for a friend! Good luck to your sis and bil, hope they get it straightened out.

 

[Diegosmom]

Yes DH is a contractor and he always receive 1099...well actually there are a lot of people that never give him a 1099...I went back and forth with 1 company last year till April 14th...finally he said well your hubby only made 1300 so I dont have to 1099 him...actually it is 600 and you dont have to 1099 and hubby made over 13,000 with this guy so not sure what he was talking about. But the rule is you have to claim all your earnings even if you are not 1099. You are responsible. Like when hubby does work for a homeowner the homeowner does not 1099.

Also if someone works for hubby he would 1099 them and he would not have workmans comp on them...

We have heard a lot of people who will hold out taxes for people (mainly hispanics) who dont have a social security and then never give them a 1099...

So it would make sense that this friend is ideally having to claim all the money for the business so when he pays BIL he holds out part of the money to cover the taxes...and then he doesnt 1099 so then BIL wont have to claim that money...Am I saying this is legal...well no,,,just saying we know a lot of people that do this (not my hubby but work associates do).

Do he get a real check like most companies or is it a personal check?

Also I know you said he didnt file taxes last year but did he do the other years...he would have got caught if he claimed he paid taxes that they didnt have record of...that is an easy cross reference for the IRS.

It it is a small company they may not have workmans comp. Hubby does not currently carry workmans comp. If he were to get hurt at work it would just go under our health insurance.

 

[LuLuO]

Is the husband considered an independent contractor? If so, and he and the employer meet the requirements then the employer may not be obligated to withhold taxes or provide workers' comp insurance.