How do I pay back taxes (from 2002)?

Question

If I was paid under the table (childcare) in 2002, but now I feel bad about it and would like to pay those taxes, how do I go about doing that? will there likely be fines? and any thoughts on if this will cause problems for the family who paid me under the table.

Answer 1

I have been a tax accountant for 27 years. There are many deductions you can take (and this has nothing to do with whether you itemize deductions on Schedule A) which will offset a good part of what you were paid for providing child care. Depending on your filing status, number of dependants and qualifying children, and total of your income for each year in question, it may well be that you are owed a refund or will owe much less tax than you suspect.

Find a tax preparer who will take the time to explain your options to you before you hire him or her. Even though hiring a professional will cost money, the expertise you gain will usually result in saving you lots of money in the end. Typically, I save my clients many thousands of dollars over the cost of my services. Ask for referrals from friends or family members and if you must turn the yellow pages, stay away from the big tax preparation companies. They are very deceptive concerning their fees and their people are typically "newbies" in the tax arena. You need a savy old lion.

Answer 2

Since you did childcare, you will have to file an amended 2002 return (if you did file a tax return originally), and have to declare that income as Schedule C income, which will be subject to not only the regular tax, but also self-employment tax (15.3% of 92.35% of the net income for the schedule C). I am a CPA/Tax Preparer, and am not telling you to not file an amended 2002 return, but you might want to figure out how much extra tax you will owe, and on top of that tax, you will also have to pay penalties and interest. You may find that you will owe quite a bit from that year. But there will be no problem for the family who paid you under the table.

Answer 3

File or amend your 2002 return as needed. There will be penalties and interest, of course.

There are no implications for the people who paid you unless you worked in their home. If you did, then they will need to deal with whatever the ramifications are, if any.

Answer 4

You will cause all kinds of problems-for yourself and those people that paid cash. Far be it for me to advise someone to do something illegal or to tell you to keep your mouth shut and move on. So who has the records? There will be fines.

Answer 5

talk to your accountant