If someone buys a money order using cash he earned under the table, will the IRS be able to detect it?

Question

If he decides to pay his rent using a money order bought with cash that he earned doing odd jobs, would the IRS be able to detect it? In other words, would that person get in trouble for not reporting it on his federal tax form?

Answer 1

I get paid under the table. I buy money orders all the time for various things like rent and electric. I also am currently recieving an unemployment check. I think you will be all right as long as you report some sort of income for the year, ie: gov. check, welfare, etc. If you have no income at all you need not worry. As long as you pay property taxes and stuff like that your ok. :) Good Luck

Answer 2

Legally, the answer is yes. The employee files a tax return for any reason, they must report ALL income including cash under the table of any amount. Its reported as self employment income using schedule C and schedule SE (if applicable). If the self employment income is less than $400 and they're below the gross income requirements to file, then the person is not legally required to file a tax return. But, if they file a return for any reason, they have to report ALL income. The employer is required to issue a 1099-MISC for any independent contractor who earns more than $600. But, the person receiving the income is required to keep their own records and report it even if a 1099 is never issued. The IRS often finds these cheaters because the employer tries to claim business expenses for the payroll, but the IRS will see that the total reported wages on W-2's and 1099's is less than the employer is trying to deduct. They'll investigate the employer, who will then issue 1099's and all the people that tried to scam the IRS will get an audit that ends with a big fat bill.

Answer 3

First, I want to thank you for shirking your duty as a citizen and forcing me to cover your share of the federal tax burden. Thanks!

Second, I strongly suggest you ignore the poor advice from people telling you that you won't get caught. Do you date? Ever break up with them? Ever pissed off a neighbor or coworker? Great! They are probably already reporting you for unemployment fraud (that's usually a 3-5 year felony) at the state level and will get a 10% reward on the money you are not reporting (another 1-3 year felony at the federal level). How easy is it to do a lifestyle audit? Easy. They calculate the $$$ needed to support your obvious lifestyle, subtract your declared income and tax/penalize you on the difference.

Good luck with those pending audits!

Answer 4

I wouldn't think so. But, you'll have to be able to explain that much money away to the tax man. Say you pay 300 a month on rent then you'll have to show that you earned that much. It's hard to talk about specifics, but generally; allways give yourself a get out clause.

Answer 5

Of course they will!! Why do you think dollar bills have serial numbers on them?? They allow the federal government to trace the travels of each and every bill printed so they know which ones are legally earned and which ones are earned "under the table". Now get off the floor and pay your taxes!!

Answer 6

No, unless the person giving you the "under the table" money is setting you up by marking the money. But that's all I can think.

Answer 7

No problem unless the person who paid the money to you reports the expense under your SS#.

Answer 8

That really depends on if the IRS was actually investigating this or not considering there is no way they could Investigate everyone.