Friday, July 16, 2010

How do I file a tax return if I was paid cash?

I was paid cash at my job last year and would like to file a tax return. Would I include the amount I earned in the wages line of the 1040? Since I don't have a W-2, will I have any problems? My former boss will not issue me a 1099 or W-2. How would I go about figuring the taxes I owe?

How do I file a tax return if I was paid cash?
You're considered to be self-employed. File Form 1040 with either Schedule C or C-EZ to account for your business income and business expenses. File Schedule SE to calculate your Self Employment tax.





If they refuse to send you a 1099, you can file a complaint with the IRS regarding that. (That will probably piss off your former boss, as now he'll have to claim his income properly now as well.)
Reply:Shame on your boss, because that puts you in a bad situation. Maybe ask an accountant. Also, if you let a CPA do your taxes it will less likely be audited.
Reply:You can fill out a 1040 just the same as anyone else. It should be included in wages earned. Any tax software or on-line product can walk you through this. You may also owe FICA and Medicare tax, since your employer is unlikely to have paid those on your behalf.
Reply:That is an illegal practice... it's called "being paid under the table". There is no way for you to file a tax return. There was no taxes taken out, thus if you report these earnings, you will have to pay taxes. You definitely won't get any money back. Also, since you were paid in cash, it's going to be your word against his. The downside to all of this is that if you plan to get a loan, you won't be able to furnish the required information (tax return, W-2's, pay stubs) to get it. The way it works is this: when you work for someone, the company pays half of your taxes and you pay the other half. The best thing that you can do if you need to show income, is to go to work for someone else or have him start taking taxes out of your earnings. You don't want to go the 1099 way because you still will be left flipping the tax bill at the end of the year and depending on how much you earned, it can be pretty stiff. You can use a general rule of thumb that you, as the employee, are responsible for about 25-30% of your earnings. This is a best at guesstimate. It really depends on how much you earn... but that's a middle of the road amount.


No comments:

Post a Comment