Paying someone under the table. questions..

[mudnuri]

Can someone explain to me how this is illegal and point me to where it is written that is....

thanks

Brandy

 

[Beth76]

I'm no expert but if you're paying "under the table", nothing is being reported to the IRS and thus no taxes are paid.

 

[wvjules]

Yes it is illegal. If someone is working for someone and is not an employee they need to be issued a 1099 at the end of the year to report it as income on their taxes.

 

[mudnuri]

I know it's illegal, i want to see it written somewhere...

Brandy

 

[wvjules]

Try IRS.gov. I doubt you will find the wording "under the table" though.

 

[Beth76]

I know it's illegal, i want to see it written somewhere...

Brandy

Try the IRS website

 

[wvjules]

http://www.irs.gov/pub/irs-pdf/p15a.pdf

 

[disneysteve]

There is loads of info at irs.gov related to this. They detail what taxes an employer is responsible to pay for his employees. They discuss individual taxes on income. They discuss employee vs. independent contractor status. Heck, the whole point of the IRS focuses on how you get paid, how your employees get paid and what taxes everyone owes. Anything you as an employer or an employee do to evade those taxes is illegal.

 

[Tigger&Belle]

I haven't looked at the links (and I'm no expert and could be wrong), but in certain cases there is a dollar amount that you can pay someone without it being an issue, ie with a cleaning person.

 

[jenm2878]

I haven't looked at the links (and I'm no expert and could be wrong), but in certain cases there is a dollar amount that you can pay someone without it being an issue, ie with a cleaning person.

Under $600/yr.

 

[aprilgail2]

I haven't looked at the links (and I'm no expert and could be wrong), but in certain cases there is a dollar amount that you can pay someone without it being an issue, ie with a cleaning person.

Yes there are....I work for a company and get paid one check, its just a few things I do fo rthe holiday season and get 600.00 and don't have to pay taxes on it...I work as an independant contractor and can make a certain amount tax free...it used to be 600.00 but not sure what it is now..

 

[disneysteve]

Actually, if you want to get technical, and perhaps one of our accounting DIS friends can confirm this, I believe ALL income is reportable. Even if you have one of those jobs where you earn less than $600/yr. and the employer isn't required to report it, you are still supposed to report it and pay taxes on it. Of course, no one ever does since there is no record of it anywhere.

 

[Bob Slydell]

Actually, if you want to get technical, and perhaps one of our accounting DIS friends can confirm this, I believe ALL income is reportable. Even if you have one of those jobs where you earn less than $600/yr. and the employer isn't required to report it, you are still supposed to report it and pay taxes on it. Of course, no one ever does since there is no record of it anywhere.

Yep, that's true. The $600 limit only applies to whether or not the employer has to issue a 1099 MISC form to the employee (which, technically, the person you're paying is). That doesn't mean the person receiving the money doesn't have to report it, even if it's under $600. It just means that the person paying the money is not responsible for sending out the proper paperwork.

So if you're paying someone under the table and it's under $600, there's nothing you need to do, but the person receiving the money legally should (but most likely doesn't) report it on that year's taxes.

 

[caitycaity]

Actually, if you want to get technical, and perhaps one of our accounting DIS friends can confirm this, I believe ALL income is reportable. Even if you have one of those jobs where you earn less than $600/yr. and the employer isn't required to report it, you are still supposed to report it and pay taxes on it. Of course, no one ever does since there is no record of it anywhere.

this is definitely true! one year i had a run in with the irs over a mistake that my previouys employer had made. the irs actually came after me for not reporting money that i wouldn't have owed any taxes on anyways. and let me tell you it was not fun, so be careful!

 

[golfgal]

I haven't looked at the links (and I'm no expert and could be wrong), but in certain cases there is a dollar amount that you can pay someone without it being an issue, ie with a cleaning person.

You can pay cleaning people as much as you want as long as they are considered independent contractors then THEY are responsible for paying their own taxes, etc. I think the differentiation is that they use their own cleaning supplies or something like that. As long as they don't work for you, how much you pay them isn't a concern. Several years ago people, politicians mainly, were getting into trouble with the IRS because they had "hired" staff, nannies, housekeepers, that worked for them but they didn't pay taxes, SS, etc. for them.