Originally Posted by rob1020
My wife started a new job at a local motel as a housekeeper today and at the end of the day was paid in cash with no taxes taken out or any record of it. They said that is how they pay. We are raising two teenage grandchildren and enjoy getting a nice EIC on our taxes. I am disabled and my wife is the only worker in the family. Could she claim to be self employed or an independent contractor, pay her own taxes and be able to get a tax refund with the EIC for the boys or should she start looking for a new job. It took two years to get this job. We are in a very small town in mi.
Thank you for viewing this and any help you can offer
The payment method of choice for illegal transactions is usually cash. It is generally not as easy to trace as credit cards or checks, which leave a paper trail.In general, this can be in trouble;paying someone under the table as you put it refers to unreported compensation for work. This is a common type of illegal payment from an employer to an employee. Generally, both parties agree to hide the financial transaction in hopes of evading civil, criminal, tax, or immigration laws. Cash is the most common payment method in these situations, since it's hard to trace. Issues arise when the employer does not provide information about an employee who is receiving the compensation. When this happens, the employee has the opportunity to not report his or her income and thus not pay any taxes on it, and the business can also avoid paying payroll taxes. By doing this, both parties are committing tax evasion.However,please remember this; Paying someone under the table is not always illegal. This is especially the case when employing people for odd jobs or babysitting. In many regions, a child under a certain age may not have to report revenue earned from things like babysitting or lawn mowing. Generally, anyone can legally be paid under the table if their wages are under the minimum reporting amount set by the government. Receiving payment under the table is very different from working as a freelancer or an independent contractor. In this situation, her employer reports all wages paid to your spouse to the IRS/state, if the payments are over a specific amount. Even though your spouse doesn't have her taxes taken out of each paycheck like other waged workers do,your spouse still has to file and pay her taxes at the end of the tax year.Her employer needs to issue her a 1099MISC aslongas the employer pays her $600 or more per year;a 1099MISC is required for payment made to individuals and unincorporated businesses if you've paid a total of $600 or more in the previous year. No 1099MISC is required if the total payments you made to the person were less than the $600 threshold.what i am syaing is;aslongas she receives a 1099MISC form her employer then she needs to report it on her Sch C also aslongas the amount on Sch C line 29/ 31 is $400 or exceeds $400 , she needs to file her return.
NOTE;I guess your spouse is not hired as a regular W2 employee but as a 1099MISC self employer; in general, I guess you can ask it to the motel owner if he/she hires your spouse as a W2 employee or a 1099 MISC self employer;aslongas she is hired as a reg employee, then as you can see, your spouse needs to receive a W2 from her employer.If not, then she needs to pay her own soc taxes aka self employment taxes aslongas the amount on Sch SE line 2/ 3 is $400 or exceeds $400. In general, when your spouse is paid on the form W-2, the employer will automatically withhold and pay all of the necessary employee income taxes which are required by the IRS. The applicable taxes are Federal Income Tax, State Income Tax, and FICA (Social Security and Medicare). In addition, the employer will pay all of the necessary employer taxes. These taxes shall include: FICA FUTA and State Unemployment Tax for the employee. In most cases, the employer will provide the equipment and office space the employee will need.then employee may be eligible for some or all of the benefits the employer may offer to permanent employees such as medical, life, and disability insurance; pension plans; sick days; paid holidays, etc.
On the contrary, as a self employer that receives a 1099MISC, Working on a 1099 basis actually means that you are working as a true Independent Contractor, I mena a self employer, under the IRS rules. You work on a 1099 basis when you are self employed such as a sole proprietor. You will report the monies they pay you to the IRS on a 1099MISC form. Your client will typically contract with you to work on a specific project. You should have a written contract with each client that will outline the work you will perform, the fees an or cost the client will pay, and how the client will pay you. You will forward invoices to the client according to the contract terms. Actual independent contractors , self deemployers as you know, are responsible for maintaining all business expenses and income and for making quarterly federal and state income tax payments.