Getting paid in cash

[billbenson]

My wife is looking for q job. She loves kids and has taken a bunch of qualification classes.

It's a minimum wage job. They pay only in cash, leaving anything to pay the IRS as well as forms up to her.

I've never heard of a company doing something like this. Is this legal?

[Freelancier]

If she is being hired as an employee, no, it's not legal. If she's being hired as a contractor, yes, it's legal, and if she earns more than $600, the company is required to send her a 1099 at the end of the year.

So... she needs to understand her employment status. If it's not above-board, a call to the local Dept of Revenue will solve one problem, but create another (she'll likely be out of a job).

[vangogh]

It's actually legal as long as all the money is reported to the IRS by the company and they pay things like payroll taxes and worker's compensation, etc. However, I would estimate there's a 0% chance the company is doing this and it's almost certainly a case of a company paying your wife under the table to avoid paying taxes, etc.

If your wife is a contractor that's different, but for your wife to be considered a contractor she's going to need to have other jobs like this one with other companies. If this is the only place she's working, the IRS isn't going to see her as a contract worker.

[Brian Altenhofel]

Unless it's a cash-based business (pawnbroker, payday lending, etc.), it's likely to avoid worker's compensation insurance (usually construction-related industries) or employee liability insurance (seen quite often in child care) where the rates are quite high.

[Freelancier]

leaving anything to pay the IRS as well as forms up to her.
That's the part that leads me to say that if she's an employee, what the employer is doing is illegal. As an employer, you most definitely have to pay payroll and labor taxes to some combination of country/state/city. If he's not doing that and she's an employee, there's an IRS audit in the employer's future.

[billbenson]

Her boss is the owner. I did a little more research and what the company is doing is illegal. My wife is having trouble finding a job so I just told her to pay her quarterly taxes and file the proper forms. Maybe in the first quarter she can go to an accountant to find all the proper forms and calculate all the taxes. After that she will know what to do and can do it herself.

[micvanlen]

We're responsible for reporting our income, not someone else's expenses. As long as you file taxes as if it were self-employed income, then you should be OK. IRS just wants it's cut from you.

[BNB]

Sounds as though the business owner is unquestionably stupid and careless. My mentors have always been very clear that you don't play games with the government. You pay your sales (and use) taxes, employees are employees and not contractors, etc. If the business owner is not reporting anything, then you could simply not report it either, which I obviously don't recommend. But it's really up to you whether you want to be a good American taxpayer or not. The "proper forms" and what not... if you are using tax software at the end of the year, it'll ask the obvious and relevant questions about income and it's very easy to report this cash income. You probably don't need to worry about trying to pay quarterly.

[Business Attorney]

As long as your wife fully and accurately reports all of the payments she receives, she is not responsible for what the company does. However, that also means that it is unlikely that the company is reporting the payments for unemployment tax purposes, which may affect her ability to collect unemployment if she later becomes unemployed (though theoretically it should not). It may also mean that if she is injured on the job, there is no workers compensation insurance to pay for her injuries.

In general, if the employer is cheating on his taxes, I would wonder what else he isn't doing right and how it might impact me.