Working "under the table"

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LaughingBoy1503

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I am curious to what are some of your opinions on working “under the table”.

Here is my situation. I am a union construction worker. I got laid off from my company about 4 weeks ago. I filed for unemployment and have been looking for work. I am registered with my union on the “out of work” list but the list is long and it will most likely be 3 or 4 months before they call me with a new work assignment. That is why I have been trying to find my own work.

Now, I ex co-worker of mine told me a few days ago that he knows a guy who needs people to work for him doing some work that I have experience in. He will pay cash (a good amount less than I normally make, but just a little more than I will get if I just stay on unemployment) and I can remain on the “out of work list” for my union and able to check in when necessary to keep my number on the list. I seriously want to take this offer if it pulls through. I don’t absolutely need the money per-say but not working has been the source of a lot of anxiety for myself recently. I just do not know what to do when I am not working and I think about things too much and cause myself a lot of distress in my own head. That is why I want to get back to work. But not something like flipping burgers or working in a office … I like hard physical labor. I was made for it.

It goes without saying that I will NOT collect unemployment if I do take this offer up. But, what are my other obligations besides that? I am thinking I need to still report any income I get and pay taxes on it. But what I am worried about it do I have to report how and who I got this income from? Will that cause the IRS to maybe come after the man who will be paying me cash under the table? I do not want to get him in trouble, I just want to work and pay my taxes on my income so that I am being honest. Will that be enough, or am I going to be pushed into a wall to report the name of this mans company and possible get him in trouble? It is not my concern if he is paying his taxes or not and I feel no obligation to turn someone in for such a matter, I am not a cop. What do you guys think? What would you do?
 
Do not take this job.

First, he is ripping you off. He wants to pay you cash because he does not want to pay employment taxes, unemployment insurance, and other insurance he should have with employees.

Second, you have to report the income AND pay ALL of the employment taxes on it. Basically he is trying to hire you like you are a contractor. That means you have to pay self employment taxes on the income. So, it won’t be a “little” less than what you are receiving on unemployment, it will be a LOT less.

Third, what if you are injured on this job? What if there is some sort of other accident involving you and other people or damage to the property on the job? This man paying you cash will claim you are not his employee and may completely disavow you. YOU will be stuck without the proper insurance, including liability, etc.

Anyone who wants to pay you under the table is not looking to give YOU a goo deal at all. They are trying to TAKE from you and you should have no part of it.
 
If you want hard physical labor, volunteer with habitat for humanity, fix up an old lady’s house that goes to your church, volunteer to plant a community garden, grow your own garden. Just do it as a volunteer unless you are being properly hired by a reputable firm.
 
I’m a little unclear on the details of this job. If you are expecting to go off from unemployment, then you must consider this a long-term job and not a simple home repair or something like that. If this is a company and they want you to work for more than a few days, I would not accept the job. It sounds like he’s taking advantage of you and if you were hurt on the job, you would be in big trouble. I suspect that what the employer is doing is illegal.

Now, if it’s just a guy who would rather hire a couple of people-who-know-people-he-knows to redo his basement, that’s another story. My stepfather is a carpenter and he’s done lots of jobs like that on the side, but he usually doesn’t do them for less than union scale. (Unless he knows the work is really important and the family literally can’t afford to pay more.) If you do accept the job, you will be obligated to pay taxes on the income, and you might want to hire a licensed tax person to help you with that. The whole deal sounds shady to me though.
 
Depends how desperate you are for money, and how long this oppertunity lasts,
I too am a physical worker , are there Aluminium extrusion plants where you are ?
Become a Die man, that’s physical and indoors,lol
If you want really hard work, try a Foundry, I couldn’t pour metal ,
Just to hard, the guys that did that were really tough and fit,
Good luck my friend,
 
The only “under the table” jobs I’ve had were babysitting jobs back in High School. But, then, I only got paid $1 an hour. I suppose I could have asked for more, but I didn’t have the heart to do so. For the most part I enjoyed it. Except when I took on a 3 year old and a little one with colic. That was the only time I had to call my mom for help. 😦
 
Working as a nanny or baby sitter I have had to work under the table. I report it on my income tax as self employment income. Your employer has the idea that you make more money this way because you aren’t reporting it on your taxes. But you will so you will be out all the self employment taxes in addition to the income tax. So my advice is if you are still receiving unemployment don’t do it. You may also need a contractor’s license if you are doing construction work.
:twocents:
 
Well, I don’t want to go just get a job in a factory or something because, first of all, I need to be able to report back to my union once every couple weeks to keep my place on the out of work list. If I do not, I will lose my spot and go back to the bottom. Unless I get a job swing shift or graveyard, I cannot meet that obligation and not miss work because of it. So, if I am going to be looking only for swing shift jobs or graveyard jobs, I might as well just look for union construction work that will pay my union rate, which is what I am already doing.

Well, I would pretty much be making $500 a week and the job is landscaping. Though, not mowing lawns and trimming trees. Landscape construction. Which is planting huge numbers of plants, putting in grass, putting in trees, irrigation and so forth. Which I have experience in. I don’t know if it is worth it either if I am going to have to be paying a huge amount of taxes on such little income anyways. It sounds like I would only benefit if I do not report the income but I do not want to do that because it would still be like stealing.

I really do not know. As much as I would love to volunteer to build a house for someone, I am still obligated to look for work every week if I want to honestly be entitled to my unemployment (which I have not collected yet) I wish the government would make it easier for people who want to make a honest buck doing what we know. Someone on welfare has more kids… they get more welfare. Someone on unemployment has a chance to make money and get off unemployment and I will get taxed without mercy 😦 I think I need to really think about this more.
 
The IRS will not ask where the money came from other than your “business”. File form C and list gross revenue which is whatever that guy pays you. Then you can deduct various expenses. You will pay a bit over 15% SSE tax on the net income and another 10+% income tax. The point of being paid “under the table” is that you don’t need to report it unless you are scrupulous.
 
Deus_tecum said:
The IRS will not ask where the money came from other than your “business”. File form C and list gross revenue which is whatever that guy pays you. Then you can deduct various expenses. You will pay a bit over 15% SSE tax on the net income and another 10+% income tax. The point of being paid “under the table” is that you don’t need to report it unless you are scrupulous.
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Thank you for that info. Yeah, I am scrupulous sometimes. But I like to think that even if I was not scrupulous I would still want to be honest. It is not like not reporting a few bucks or even $100 bucks. I would be working for this guy for a good amount of time. It would be stealing to not report thousands of dollars. Some people have no problem doing this and even STILL collect unemployment at the same time. I cannot do that.
 
LaughingBoy1503 said:
I really do not know. As much as I would love to volunteer to build a house for someone, I am still obligated to look for work every week if I want to honestly be entitled to my unemployment (which I have not collected yet)
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Are you SURE about that? BTDT with hubby’s union job and lay-offs. Here, you are not obligated to actively search for work IF you are already a union member and on their out-of-work list. It is assumed the union is actively looking for work for you, and, of course, you must accept whatever job they come up with for you, but you don’t have to go around filling out job applications like the non-union folks do to remain qualified for unemployment.
Check with your unemployment office and union rep. - that would allow you to actively volunteer while waiting to move up the list.

I know it’s a frustrating situation to be in. You’re in my prayers.

CJ
 
Deus_tecum said:
The IRS will not ask where the money came from other than your “business”. File form C and list gross revenue which is whatever that guy pays you. Then you can deduct various expenses. You will pay a bit over 15% SSE tax on the net income and another 10+% income tax. The point of being paid “under the table” is that you don’t need to report it unless you are scrupulous.
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This approach opens the issue of providing worker’s compensation for yourself, state tax, and other associated taxes as well as compliance coverage. The IRS highly frowns on the “under the table” practice and enforces heavy penalties if an audit uncovers this exchange. You also face penalty from various state entities if you are listing yourself as a “subcontractor”, and not adhering to state regulatory requirements. (not to mention the new requirements for all vendors to receive 1099 forms)
I work in this type of compliance arena and my experience yields a negative outcome on these “under the table” arrangements. Continue your unemployment, and seek the various workforce resources in your area, besides your union, to cultivate opportunities. “Under the table” is usually viewed as “underhanded” by state and federal entities.
 
LaughingBoy1503 said:
Well, I would pretty much be making $500 a week and the job is landscaping. Though, not mowing lawns and trimming trees. Landscape construction. Which is planting huge numbers of plants, putting in grass, putting in trees, irrigation and so forth. Which I have experience in. I don’t know if it is worth it either if I am going to have to be paying a huge amount of taxes on such little income anyways. It sounds like I would only benefit if I do not report the income but I do not want to do that because it would still be like stealing.
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If a commercial landscape company is not willing to hire you legally, you should not take the job. There is something very wrong going on in that company if they will not hire employees, insure them, and pay the proper taxes.
 
When I worked under a union, and at certain times, we would be laid off, usually only lasted a month or 2, but still bills kept coming, so I filed for unemployment, and got it, they did not make me look for work, only because I had a definite back to work date.
 
Convert1 said:
This approach opens the issue of providing worker’s compensation for yourself, state tax, and other associated taxes as well as compliance coverage. The IRS highly frowns on the “under the table” practice and enforces heavy penalties if an audit uncovers this exchange. You also face penalty from various state entities if you are listing yourself as a “subcontractor”, and not adhering to state regulatory requirements. (not to mention the new requirements for all vendors to receive 1099 forms)
I work in this type of compliance arena and my experience yields a negative outcome on these “under the table” arrangements. Continue your unemployment, and seek the various workforce resources in your area, besides your union, to cultivate opportunities. “Under the table” is usually viewed as “underhanded” by state and federal entities.
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If they came under your scrutiny they weren’t doing a very good job of making an “under the table” arrangement. I don’t know what State you are in but they sound a little heavy handed.
 
Deus_tecum said:
If they came under your scrutiny they weren’t doing a very good job of making an “under the table” arrangement. I don’t know what State you are in but they sound a little heavy handed.
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The IRS conducts random personal and business audits annually, as does all state revenue departments, state workers compensation organizations, state unemployment (Dept. of Labor) etc.etc.etc.

This isn’t “heavy handed” these are the facts. It would only take one of these entities uncovering this practice and it would not fair well.
 
I will give you the benefit of my 15 years experience as a tax consultant. I am not a lawyer, but spent an extensive amount of time looking into both the Law itself, and the practical ways it was enforced by the Tax Department. As a result, I was able to help people work through numerous tricky tax problems that the accountants had already given up on.

As I see it, your choice is easy. Since this is a short-term proposition, there is no need to put a lot of effort into following rules that don’t strictly apply. You will not find “under the table” in the tax code. It is an expression used to create the illusion of impropriety when you are not in fact doing anything wrong.

Were you the business owner who paid all his employees in cash, this would be a completely different discussion. Long term, various employee protections matter, and his avoiding them is a problem. But the issues are not the same for you, as you have only a short term situation to figure out, and the only hang-up is whether there is a lot of paperwork to comply with or not. You seem happy with the terms he is offering, and so that is good enough for this situation because even if a problem comes up, you will be done with this job soon enough.

I can tell you two things about cash payments that I know from experience. The first is that they are almost impossible for the Tax Department to trace, and even more so when they are only for a short period of time. The second, and most important is that the tax code does not actually apply to cash transactions, and consequently such transactions play a very minor role in tax investigations. The Tax Dept. spends almost all of its time pouring over bank records, as those are the transactions strictly subject to the tax code. In the dozens of cases I helped people with in Court, bank records formed a key part of the evidence every single time. I have even won arguments with auditors who wanted to deny tax deductions for expenses paid in cash, including payments to workers.

No one will tell you this. I only discovered it by experience. I can prove it legally and with actual won cases, but I am not here to do that. I will simply tell you that your motives are right, the long-term ethics of the employer are not your concern, and so I would take the job and spend no time on “tax compliance”, knowing that it is a lot of extra effort for a very short-term situation.

If you still have a sense of guilt, donate the excess to charity.
 
Convert1 said:
The IRS conducts random personal and business audits annually, as does all state revenue departments, state workers compensation organizations, state unemployment (Dept. of Labor) etc.etc.etc.

This isn’t “heavy handed” these are the facts. It would only take one of these entities uncovering this practice and it would not fair well.
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“random”
 
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