Can you pay a current employee off the payroll books as unreported income if it remains under $600?

Question

If we have people that we have as employees on payroll can we pay them additional wages off payroll and not have them be taxable as long as it remains under the $600 limit?

Answer 1

Nope. It's called fraud. Plus, if they are employees subject to withholding, then you cannot simply opt for them to be paid as if independent contractors, which is wher you get that $600 figure. Contractors are paid full wage reported on 1099. It's not up to the employer to decide an employee is a contractor. There are criteria set in place by the IRS.

And you would do a HUGE disservice to your employees should your little scheme backfire and they get audited. Trust me, they would not hesitate to turn YOU in for having hatched such an illegal plot. Not only would you be audited as well, but then subject to fraud.

Answer 2

hello ...All income is reportable income, on or off the books... law!

The limit for SE Tax (Self Employed) to be paid (15.3%) starts at $400 not 600. This requires a 1099 misc form from the employer (who will need it for the deduction on his business income tax). The recipient pays the SE tax as well as income tax for money over $400 he receives. If less than 400 it goes on line 21 of the 1040 as 'other income' and income tax is figured in but no SE tax is due.

And NO to you issuing a 1099 misc to a payroll employee if that employee is doing the identical work. If it is different work and the person supplies their own tools and can do work when they choose to, not you, then you can take them off the books and pay them as a self employed contractor...and issue the 1099.

Hope this helps..Good Luck

Answer 3

NO!!! It is considered tax fraud. Any company has to account for every penny they pay out. If they pay you off the books they have to account for that money. How are they doing that? If they get audited by the IRS, they are in serious trouble. Technically, though it doesnt happen, if you go an mow someones lawn for $100 dollars, you are supposed to report it to the IRS. You could be audited as well and have to explain where your income is coming from.

Answer 4

Which part of tax fraud did you not understand? When you arrive in the Federal Penitentiary ask them to get you a few books on tax law from the IRS.

Answer 5

If you're any kind of business person you ought to hire an accountant,contact your Attorney General's office and check out employment laws, or pay $200. and go directly to jail!

Answer 6

Of course not. Income tax is not the only required tax. What about social security tax, medicare tax, disability insurance, workmans compensation?

Answer 7

yes, 600-800

Answer 8

Absolutely not!