Employers who pay under the table

rob allen

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We do everything by the book, everything. However I see lot companies paying their guys under the table. I was asked by someone who worked for one. He asked “Rob whose responsible for taxes since my boss doesn’t have a payroll”. I said “Ultimately I would think the employer but I’m not a tax attorney or accountant”. How would you have answered?
 

Todd the Cleaner

Todd Cottino
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Paying under the table only hurts the employer. He loses his tax deduction and he pays income tax on what the employee would be paying had it been properly reported. Employees paid under the table make out like bandits.
 

rob allen

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Paying under the table only hurts the employer. He loses his tax deduction and he pays income tax on what the employee would be paying had it been properly reported. Employees paid under the table make out like bandits.
Interesting. Never looked at it that way. My wife is super legit so I’ve never known anything else.
 

keep it clean

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We do everything by the book, everything. However I see lot companies paying their guys under the table. I was asked by someone who worked for one. He asked “Rob whose responsible for taxes since my boss doesn’t have a payroll”. I said “Ultimately I would think the employer but I’m not a tax attorney or accountant”. How would you have answered?
They need to each carry liability insurance quote employer can pay them as subs. Ive been payed that way for years. Most contractors operate this way. "Employees" subs get 1099 at end of year and pay quarterly estimates throughout the year. But so called employer has no ability to control said employee. They can set hours, they can take off, they can go work for someone else when your slow, they can do side work. As an aka self employed contractor.
 

brian3180

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Both have their own responsibilities of claiming income and expenses. If you earn it then you report it. Regardless.
 
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J20770

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If the employer got caught he would be responsible for paying the taxes for both employee and employer along with whatever else the feds and state want to add on. The employee may also be responsible for all or part of the unpaid withholding plus a fine for not reporting the employer.

Sub contractor laws have changed in the past few years. Now you can only legally be classified as a sub contractor if you are paid by the job; not the hour, you provide your own tools and equipment, you are in charge of your hours, breaks, etc. Basically you are your own boss supposedly without all of the headache. Employer must issue a 1099 but is not required to take out taxes. There are 20 questions/criteria that must be met to qualify. Of course a good attorney can find a loophole for most of the rules such as when it comes to equipment there could be a lease agreement.

At the end of the day it's not worth the headache or risk. Put the employee on the payroll, pay your taxes and be done with it. I know too many people that have tried to screw big bro only to end up getting screwed when it's time to retire and they get the minimum SS check or worse, no longer able to work from injury and have to live off the minimum SSD/SSI check and get other assistance. Pay now or pay later, either way you will end up paying.
 

rob allen

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If the employer got caught he would be responsible for paying the taxes for both employee and employer along with whatever else the feds and state want to add on. The employee may also be responsible for all or part of the unpaid withholding plus a fine for not reporting the employer.

Sub contractor laws have changed in the past few years. Now you can only legally be classified as a sub contractor if you are paid by the job; not the hour, you provide your own tools and equipment, you are in charge of your hours, breaks, etc. Basically you are your own boss supposedly without all of the headache. Employer must issue a 1099 but is not required to take out taxes. There are 20 questions/criteria that must be met to qualify. Of course a good attorney can find a loophole for most of the rules such as when it comes to equipment there could be a lease agreement.

At the end of the day it's not worth the headache or risk. Put the employee on the payroll, pay your taxes and be done with it. I know too many people that have tried to screw big bro only to end up getting screwed when it's time to retire and they get the minimum SS check or worse, no longer able to work from injury and have to live off the minimum SSD/SSI check and get other assistance. Pay now or pay later, either way you will end up paying.
That’s mostly what I’ve heard too. Good advice.
 

PistolPete

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I pay cash for a couple of p/t helpers I use occasionally.
If you take on a f/t helper, then it's better all around if you put them on the payroll.
 

J20770

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I pay cash for a couple of p/t helpers I use occasionally.
If you take on a f/t helper, then it's better all around if you put them on the payroll.
Legally as long as you don't go over $600 per year you can do that under the casual labor rules without raising a flag.
 

PistolPete

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Legally as long as you don't go over $600 per year you can do that under the casual labor rules without raising a flag.
I pay $150-$200 a day. Last big job I used a helper on I blew that limit!
 

keep it clean

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I pay cash for a couple of p/t helpers I use occasionally.
If you take on a f/t helper, then it's better all around if you put them on the payroll.
Thats what i do. Pay a guy for a couple days work here and there. I eat it at end of year.

Fk thanks for reminding me. I need him for 3 days next week. I forgot to call him!!!!
 
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Tcoulter

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I almost always do everything by the book. When I bought my company, the owner had all sorts of under the table things going on. It seemed pretty sketchy to me. But I work alone now, although I do hire my buddy who worked for me for 2 years, but he probably only works 4 jobs per year with me now. So when he does, I just throw him cash and we call it good.