Does he need a cancelled check or receipt to declare this on his taxes? If he does. Then do I have to pay self emploment tax on this cash?
2007-01-07 22:46:10 · 8 answers · asked by Bat 1 in Business & Finance ➔ Taxes ➔ United States
Can he claim it without cancelled checks or receipt?
2007-01-08 00:50:54 · update #1
he is paying you off the books no taxes for you he isn't claiming you as a worker
2007-01-07 22:51:01 · answer #1 · answered by Anonymous · 0⤊ 1⤋
According to the IRS, if you work as a a subcontractor and you earn over $300.00 he should issue you a 1099-Misc. If he doesn't, you in good faith need to report that you did earn this amount of money, in good faith, to the IRS. This would be put on a schedule C. Say you repaired his roof. If you bought a ladder for this purpose, you could write off this amount of expense against the money he gave you to fix the roof. Receipts are recommended and should be kept, so in case you are audited by the IRS you have your bases covered. If you have no expenses to claim, this would all be income and you would have to pay self-employment taxes on the entire amount. Minute amounts of cash are hard for the IRS to pursue, but they are tired of all the lost revenue that continues each year and they could pursue it if they had reasonable doubt.
check out this site: www.irs.gov type in 1099-Misc in the search and start reading. Not as dry as most would think it would be. Good luck. Save those receipts this year ok.
2007-01-07 23:29:36 · answer #2 · answered by perleo 3 · 0⤊ 0⤋
Yes he can claim it without documentation (he would only need to provide documentation if he gets audited). The real question is whether he is going to submit a 1099 for you. If he files a 1099 he is supposed to send you a copy (by the end of Feb. I think).
Did you give him your social security number? If he didn't ask for it he's probably not going to file a 1099. But if he takes the deduction & later he gets audited, he will probably provide the IRS with the info he has on you to try and keep the deduction. The fine to him for not filing the 1099 is minimal.
If he doesn't give you a 1099, you are still supposed to report all income received (minus all expenses of course!). You would only have to pay self employment taxes & regular taxes on income after expenses (such as use of your vehicle, tools, supplies, etc.).
2007-01-08 03:05:42 · answer #3 · answered by Dee 4 · 1⤊ 0⤋
Did he pay you more than $600?
If yes, then he will need to give you a 1099 & file it with the IRS. Because house repairs are NOT a deductible expense, he probably won't bother.
The only way he would need a receipt is if he is audited, or you deny the income to the IRS.
Go talk to your neighbor and find out if he is planning on trying to claim this expense on his taxes, then you will know if you need to claim the money on your taxes.
2007-01-07 23:01:17 · answer #4 · answered by Gem 7 · 1⤊ 1⤋
Pay 1/3 up front. Pay 1/3 partway through the construction. Pay the last 1/3 when the job is DONE. This will be outlined in your contract. Also, make sure your contractor pays the workers (subcontractors: plumber, electrician, kitchen guy, floor guys and so forth) because if they are not paid, then they can place a lien on your home.
2016-05-23 09:24:17 · answer #5 · answered by Anonymous · 0⤊ 0⤋
I second Gem and Perleo, however the amount is $600 not $300 as Perleo stated. Everything else is correct.
2007-01-08 00:17:23 · answer #6 · answered by strawberrycrush 4 · 0⤊ 0⤋
hell no. take the money as an under the table job, and worry about it if something comes up. Youve got a good thing going there.
2007-01-07 22:47:44 · answer #7 · answered by cmil8 3 · 0⤊ 1⤋
ask him if he is to going to claim it. then you will know how to proceed. if he claims it you have to claim. if he doesnt then you dont have to either.
2007-01-08 00:18:46 · answer #8 · answered by starla 3 · 0⤊ 1⤋