should you get a paycheck stub with your paychecks? Cutco knifts don`t send you a check stub,?

Question

I have a friend that works for cutco and he does not get a pay check stub, he says he don`t have to pay any taxes one this money. I though you had to pay taxes on all money made? Or will he be hit at tax time?

Answer 1

Oh- he'll be taxed come April just like everyone else.

If he is being paid as a independent contractor, he will be hit with his regular tax plus 15.3% FICA. I would recommend looking at his 2006 tax return and paying the 2006 tax (less any w/h from other jobs, or 110% of his tax if AGI is high enough) as a 2007 estimate. This safe harbors him against penalties. On top of that, I would recomment setting aside 25 + 15 = 40% of the wage, less what is paid in to withholdings so he has the ability to pay his tax in April. His tax will likely be lower if he is selling knives but he can use the buffer to toss some money into an IRA, furthering reducing his tax and which is just solid reitrement planning.

Tell him also to keep track of every business expense as if the expenses are valid (especially mileage), he should be able to deduct the expenses on his schedule C.

Answer 2

He is apparently working as an independent contractor. They won't take any taxes out, but yes, he'll get hit big-time at tax time, and should be making quarterly estimated payments to avoid owing penalties in addition to his tax. He's WRONG if he thinks he doesn't have to pay taxes on the money, it's just that the company isn't taking it out of his paycheck. He still owes it. They should send him a 1099-misc at the end of the year showing what he was paid - this is instead of the W-2 he'd get if he was an employee - and also report the amounts to the IRS.

Answer 3

Tell your friend to check www.irs.gov, so that he realizes that he WILL pay tax on this money. CutCo will send him a 1099 form at the end of the year, as well as a copy of same to the IRS. If he doesn't claim this as income, the IRS will come a calling in short order.

He's obviously working as an independent contractor salesperson for CutCo. They do not withhold taxes nor SS on these commission checks. He pays that when he files his taxes for next year.

Answer 4

He'll be hit at tax time, you can't get away with not paying taxes forever. Alot of companies have stopped sending out pay stubs because there being used in identity theft schemes. And of course it saves the company money as well...

Answer 5

He's being paid as an Independent Contractor. He should be making quarterly estimated tax payments to the IRS and the state tax authorities. If he isn't, he'll be crucified at tax time.