Employer does not file taxes~ can he still report wages to IRS?

Question

My fiance's employer has not withheld any tax money from him
this year. He just pays him cash every week- and I know this isn't good! If his employer does not fill out a 1099 at the end of the year, reporting the wages he has paid his employee- can my fiance' still report it himself? With a close estimate of what he earned? Or does he have to have documentation from the employer?

Answer 1

He doesn't need documentation form the payer of the monies, but he DOES need to keep accurate financial records himself.

He's being paid as an independent contractor. Legally his status is self-employed. If he's not keeping accurate financial records of his income and expenses he'll be in dutch with the IRS at tax time. He needs to get off his lazy backside and set up a bookkeeping system.

Answer 2

What your fiance would need to do is tell the employer that he needs either a W-2 at year end, or a 1099, or he will report the employer to the irs. Your fiance should check though to see whether he qualifies as an employee and should be paid via a paycheck and get a W-2 at year end, or is he an independent contractor and get a 1099 at year end. He doesn't need a 1099 to report his income earned, but the employer could be in irs trouble if he doesn't give him a 1099 when he legally should.

Answer 3

Your fiance should keep records of what he is paid, and any associated deductible expenses. At tax time he would file a form 1040 along with a schedule C or C-EZ, and report his income on the schedule C or C-EZ. He doesn't have to have anything from his employer.

The employer is most likely doing something illegal by paying this way, especially if he doesn't provide a 1099 - and I'm guessing he won't. If your fiance doesn't report the income, he is also doing something illegal.

Answer 4

If your Fiance's "employer" is not withholding taxes he is violating the law. I suspect that he is doing so intentionally and assumes that your fiance will do the same and not file a return. To properly file his tax return your fiance would file a substitute W-2 with the best estimate of his wages and report the employer for failure to withhold. This will get him right with the IRS but the employer will be rather unhappy.

Answer 5

Oh your fiance can report his earnings. And you are right. This is wrong. He is being paid "under the table" Lots of people do this. He will have to report who he was working for and give them all kinds of information. There will be an investigation. I recommend he have a plan B for employment next year. Good luck.

Answer 6

Lots of good answers so far, however, every answer has left something out. If your fiance's employer is not withholding taxes, then your fiance needs to be saving about 40% to 45% of his pay so he'll have enough to pay the taxes due when he files. Also, your fiance should probably be making quarterly payments to the IRS now to avoid any penalties on April 15.
He may want to check out the IRS site for self-employed individuals, even if he doesn't meet the IRS definition of self-employed.
http://www.irs.gov/businesses/small/article/0,,id=115045,00.html

Good luck,