2 votes

Getting paid "off the books" dilemma (I don't want to be)!

Interesting practical problem:
"I am retired and am working part time basically just to keep busy. I am also collecting social security but, due to my age, I can earn as much as I want without it reducing my SS so that isn’t an issue for me. I came across a job last Jan at a local business (a national franchise whose owner has just 1 store) where I can and do literally walk to work. The hours are good, the job is relatively easy and I enjoy working there.The dilemma is this. The owner refuses to pay me properly. He only wants to pay me “under the counter” and by check. I have been fighting him with this over the 10 months I have been working there. I WANT TO show this income and be paid properly. I have wrangled about 5 months “on the books” payments out of him but his other 2 employees (kids in their 20’s) have never been paid properly and don’t care (not my problem). Going forward in 2014 he refuses to pay me “properly.”I don’t want to quit. It’s just too convenient. My question is: Am ** I** “protected” from IRS issues if I simply report all the income (he pays me by check!!!) in January as misc income? I don’t care what happens to him for improper payroll procedures, just me. I do have a federal EIN number from a part time business I had and I could even report it as income for that business. I don’t really make enough there to even have to report estimated taxes but I do anyway.My concern is the legal (IRS, STATE) issues I may create FOR MYSELF working there. Am I “safe” if I simply report everything I get paid from him? Since the dummy pays me by check (that is his cash) if he gets audited HE’S screwed. I just don't want to give up the convenience of this."

Continues: http://www.fatwallet.com/forums/finance/1310760/

Disclaimer: I am not the person that is facing this, I just thought it would be a good exercise how to apply liberty principles to a problem like this. If you want to respond directly to the person with the problem do so on the link on that site...

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If you feel compelled to do

If you feel compelled to do this then all you should have to do to make it "legal" is fill out a schedule C right? Then when you do your taxes you'll just have to pay what you owe? That's what I do and I'm freelance. Just save 25% in a bank account or a coffee jar and that's what you'll pay at the end of the year to the EYE-UR-ES.

if you are being paid by check

that is not under the table.

extremely traceable, I'd say

extremely traceable, I'd say you better fix that asap.

Why, exactly....

Would you prefer your paychecks be reduced by taxes?

tasmlab's picture

Ask him for cash instead

To reduce risk, ask for FRNs and don't even take them to the bank. Use it to pay-out-of-pocket expenses.

The worse that would happen is they'll ask you to pay it later.

(sorry if this post is duplicate)

Currently consuming: Morehouse's "Better off free", FDR; Wii U; NEP Football

If you are just there for fun, you can offer to work for free.

If you are just there for fun, you can offer to work for free. Or ask the owner to donate to charity what he would have paid you.

Tell me, why are you at the Daily Paul?

Your employer is a hero in my book. If I were him, you would have been fired ten months ago. If more employers were like him, we wouldn't even have an I R S problem.

Your comment: "I don’t care what happens to him for improper payroll procedures, just me." Really? Why you selfish little B i t c h.

Has anyone ever told you that you were an ungrateful DickWad?

Now wander off and hang you head in shame. Also, close you DP account because you don't belong within a group of liberty lovers.

“Disobedience is the true foundation of liberty. The obedient must be slaves.”― Henry David Thoreau

egapele's picture

Read the whole post

the letter was not written by a DP member.

Sometimes it seems like people come here for butt kicking.

The disclaimer was added after I read it.

Free includes debt-free!

English grammar 101

I added the disclaimer because people started to blame me but from the very beginning the text has been on quotation marks meaning that those words are not my words but the words of someone else...BTW no offense taken :)

A good way to defend your freedoms: www.libertymagazine.org

But the headline says, "I don't want to be!"

Pronoun confusion when linked to your nym.

My rule of thumb, people are text learners, audio learners, visual learners or learn by doing.

Specialists are more common than those that can translate between all the methods.

This confusion has caused many a misunderstanding.

It's tragic if it happens to me, comedy it it happens to you.;-)

Free includes debt-free!

egapele's picture

Hath thought not more faith

in your fellow DPers? :-)

Well, I was wondering :-)

But Ed's addendum satisfied me.

Free includes debt-free!

Government regulations cost money to implement.

The government doesn't want any business not belonging to the Federal Reserve to succeed.

That is the nature of a government sponsored cartel.

Filing business tax crap ain't cheap. Maybe he should hire an accountant and fire you?

If an individual makes under a certain amount they are not obligated to file.

Free includes debt-free!

Not Far Enough "Under the Counter"

A check with one's name on it isn't too smart. "Under the counter" payments should ideally be done with cash.


I know people like this--

people who feel they are being 'honest' to report other people for following a different path--

I don't want to say too much, because I don't know who is watching, but--

being paid 'under the table' is one ray of hope in an otherwise hopeless world--

it's hard to be awake; it's easier to dream--

You're an immoral, ungrateful, little btich.

The man's a hero doing what most of us with families cannot afford the courage to do. I certainly don't have the courage, but I applaud those that take the risk. It doesn't even matter if he's doing it for principle or for less noble reasons. He's doing it.

You enjoy the job, you can walk to work, wtf man.

You should quit. But no, what you will do is drag this poor guy down whose only 'crime' was being foolish enough to hire an immoral, ungrateful, little btich.

If you don't want to be paid under the table, don't take the jobs that pay under the table. That simple.

tasmlab's picture

Keep on taking the checks

He's saving you money at his expense, although if it is retail he gets cash in.

You can be safe and claim the income and pay the government. But why? They are just going to use the money to kill people overseas.

I would just cash the checks and not claim them. Put 1/4 of the money in savings. If you ever get audited, they'll just make you pay the taxes you missed plus a penalty. They won't give you a bad rating or throw you in jail or anything.

And I don't think they bother part-time retirees making a few bucks. Your tax liability is probably nominal anyways.

Currently consuming: Morehouse's "Better off free", FDR; Wii U; NEP Football

Checks are traceable and

Checks are traceable and should be reported. Cash has no such paper trail (to coin a phrase).

I don't get it...

I know lots of people who view it as their patriotic duty to work for voluntary exchange outside the immoral framework of the psychopaths. Their options are very limited because employers want to report on them to get the associated "deductions."

In this situation, why not push the other direction, and simply ask for direct payment in paper frns or silver?

No idea why you are complaining, but if he's paying you by check

and he's not reporting it to the IRS, he's an idiot.

If you can get him to 1099-misc you that might be the safest option.

It could be that he doesn't have a Federal EIN, in which case, he can't report anything on you.

He may WANT to remain doing business that way, because if he gets an EIN just to report what he pays you, the presumption now is that he is an "employer" under the code and must report EVERYONE he pays.(actual status is usually ignored by the IRS and the courts. You can "elect" to be treated as if the law applies to you and not only will they not question your choice, they will enforce it on you, even if you didn't know it was a choice. They'll even lie to you and tell you there is no choice, even if there is one)

In short,your demands are likely to fubar a probably legal arrangement for everyone else based on your insistence of what you think the law is.

Personally, the "right" thing for you to do here is quit.

How odd, there are millions looking for work and maybe hundreds of thousands (or more) of them would want your exact arrangement—who maybe even pass up jobs because their bosses ignorantly insist on stealing from them and reporting the theft to the IRS. And here you are, wanting your boss to steal and report on you and you don't want to quit. Did I just enter the Twilight Zone?

The person should quit

That simple. The employer is looking for someone to pay under the table. When she asked for above board wages, he should of fired her. The person would call the IRS if the owner fired him though, so now he is trapped with this lowlife. This statement the person made says it all, " I don’t care what happens to him for improper payroll procedures, just me." Not grateful or appreciative at all. Sadly typical.

"None are more hopelessly enslaved than those who falsely believe they are free." Johann Wolfgang von Goethe

Lamb of God - As the Palaces Burn

start an llc that performs services...

and file under that?

for example, you could be "Helping Hand LLC", you get paid by someone for services rendered (your work) then you pay the tax and the "customer" (your boss) doesn't have to bother.

how about that?

I use Blue Wave, but don't expect one of THEIR silly taglines.

Probably considered "structuring" or something similar.

The IRS considers most arrangements like this to be attempts to abuse the system.

The big red flag will be that he doesn't "provide services" for anyone else. Thus this will appear to be trying to mask an employer/employee relationship and an attempt to avoid withholding.

They don't care if you are paying everything they claim you owe, if you also aren't doing it the way they want you to, they'll still go after you.

It isn't about the money—it's about control.

You're in a difficult position.

He's paying you by check, gross amount with no withholding. You should expect a 1099 by early February where you are liable for income taxes plus self employment rate FICA (15.3%). I see this frequently, mostly in the construction industry. There are IRS tests for considering someone a contractor (1099) vs. an employee (W-2).

If you do not receive a 1099, you can clear yourself by filing that gross pay on your tax returns, but you might stir things up with your employer's relationship to the IRS.

If you must do business with

the aye arr ezz, file as an independent contractor. The franchisee is now your customer.

See my above reply and the one right above yours - this

could result in trouble if it isn't done "just so."