Can an employer deduct taxes from cash wages?

Question

If anybody knows anything about this please tell me what you know. How does one file at the end of the year and does the employer have to match what he deducts? I have never heard of an employer deducting from cash, is this legal?

Answer 1

It is legal for an employer to pay you in cash rather than by check. The rules for deductions, and for employer match for social security and medicare, are the same either way.

You should get some sort of paperwork with each pay showing your gross, and what was deducted and what the deductions were for. Save these so you have proof if you need it later. You should receive a W-2 early next year showing your income and withholding for 2007.

Answer 2

Wages are wages, whether paid with a check, cash or direct deposit.

In fact, not witholding taxes is illegal.

He should provide you with a w-2 at the end of the year. Some taxes, social security and medicare the employer matches what was withheld. Other taxes are either just employer or employee funded.

If he doesn't provide you this information, you can contact the IRS. They love to get people back on the right page. However, if you are still working for this person, plan on finding a new job if you call the IRS.

Answer 3

All employers must deduct both federal and state (unless you live in a state where state taxes do not apply) from wages, regardless of how they are paid. BUT your employer MUST provide you with some sort of paystub showing the deductions, AND a W2 at the end of the year... This W2 is what you will need to send to IRS and state agency when filing your taxes. More than likely, you'd receive a refund from the IRS and state agency. If your employer is not providing you with backup to your pay (paystub) then ask for it for your personal records. It's mandatory for employers to provide their employees with W2s. If your employer is not willing to provide this to you, then contact the IRS letting them know your employer is deducting taxes, but not giving you the W2 so you can file your taxes - the only reason an employer would not give you one, is #1 they are paying you under the table (not taking out taxes - illegal) or #2 they are dedcuting from you, but not filing with the IRS (illegal)...

Answer 4

It doesn't matter how the wages are paid -- cash, check or beef carcases -- taxes must be withheld. Although not many employers still pay in cash, withholding of taxes is mandatory regardless of the method of payment.

You should get a pay slip on each payday that lists all income and withholdings. You'll also get a W-2 at the end of the year listing your total income and withholdings for the year. You'll use that W-2 to prepare your tax return.

Answer 5

Paying in cash is legal and deductions are required the same as if you were to get a check. However you should be very careful. My bet is that you will never see a W-2.