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Question re: 1099 taxes?

A friend was working for someone being paid cash "under the table". He never signed any paperwork and it was always a cash payment. Basically, there is no documentation that he has worked for this company. If the company tries to push a 1099 at him, what should he do? If he does the 1099, then he ends up making as much as he would have doing fast food, with harder work and longer hours. Should he ask the guy to pay for 15% of the tax? He doesn't want to ruin a friendship over this, but cannot afford to pay out 30% of taxes when it was never discussed, otherwise he would have asked for a higher wage.

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Anonymous

Asked by Anonymous at 11:32 PM on Oct. 10, 2010 in Money & Work

Answers (6)
  • If it was under the table and they have no documentation of any of the money that he was paid cash if he didn't sign anything or fill out a W4 or anything with his social security number and there were no taxes taken out of the pay i would definately fill out any paperwork now. The guy can say he would pay 15 % of the tax and not do it that gets into a sticky part rite there. I would say if they agreed on cash then that's what it should be just cash if the guy is a true friend he will understand that, and if not he'll have to cut his losses. hope this helps!
    Bluesdawg02

    Answer by Bluesdawg02 at 11:38 PM on Oct. 10, 2010

  • If that company is ever audited and they want to know where $35,000 (not sure what your friend makes, so I am just putting a number out there) went, don't assume that the owner will stay quiet about it. Your friend may not get found out this year or next year, but eventually it will come back to bite him in the ass. Tell your friend to do the right thing and claim his earnings as income.

    JeremysMom

    Answer by JeremysMom at 11:44 PM on Oct. 10, 2010

  • Pay taxes... it's the law.
    sherribeare

    Answer by sherribeare at 1:23 AM on Oct. 11, 2010

  • Ok WRONG...There is no documentation on EITHER party, thereby NO PROOF..if saying it ever went to court it is One word against the other...THere is NO paper trail so, the company can say they were paying the Pope the whole time...and it can easily be denied.

    Its also NOT 30% of your wages, unless you are making like more than 150-200K a year and that means every say 2 weeks your friend would be receiving like close to 6K every two weeks which one would assume you could certainly afford taxes.

    Your friend COULD also reverse and claim well this is what he was paid cash b/c HIS understanding was that the employer was ALREADY taking out tax before paying him!
    Happymom2-2

    Answer by Happymom2-2 at 8:58 AM on Oct. 11, 2010

  • Ok WRONG...There is no documentation on EITHER party, thereby NO PROOF..if saying it ever went to court it is One word against the other...THere is NO paper trail so, the company can say they were paying the Pope the whole time...and it can easily be denied.


    Unless, her friend is hiding money in his shoeboxes, there is proof. If the company is under audit  and they tell the IRS that they paid so and so x amount of money, they will look into that person's personal finances and wonder "Hmm, how can he afford this car payment if he didn't claim any income last year, or the year before, etc". Yes, they could reverse (aka lie), but why do that. When they can tell the truth from the beginning and not have to keep up with what lie they told.

    JeremysMom

    Answer by JeremysMom at 9:20 AM on Oct. 11, 2010

  • Im not trying to be difficult Im really not, But I know a GF that went through this just last year, b/c she was doing childcare completely under the table and then the family decided they were going to try to claim the childcare on taxes, and there was a whole situation. Ultimately in the end the Childcare worker was no liable b/c there was no paper trail or proof.

    Actually they can claim John Doe did it, and John Doe can say I dont even work for him, the company can't prove he did..or where that person's deposits are coming from and John Doe can just as easily say anyone gave it to him.

    Im not suggesting anyone SHOULD lie, Im saying that he isn't going to end up losing 30% of his income b/c they have no proof that they gave it to him, or that in fact that is where his money came from..

    Happymom2-2

    Answer by Happymom2-2 at 1:45 PM on Oct. 11, 2010

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