Husband & wife owns a tiny neighborhood convenience store(sells groceries, beer & wine, lottery) & works 7 days a week (about 80 hrs/week). They've been working in this arrangement for past 5 years. They're getting a little tired physically cause they don't have any days off & bills need to be paid.
One day one of customer asks if we would hire him part time.
He says he has a regular full time job(cashier at some market similar to ours but bigger) where he pays taxes. Since he currently works Mon-Fri, he says he can work for us just on Sundays(9 am to 8 pm). But he'd rather want to be paid cash(at minimum wage($7.50/hr)). If we hire him, we can have Sunday off to relax.
Should we hire him with this arrangement?
I am just afraid of IRS or some government agency might come after us later on.
Or will IRS give us a break since we pay full taxes and the potential part-time employee pays taxes on his other full-time job? The store is in Los angeles by the way
2007-08-09 03:18:23 · 8 answers · asked by mane 1 in Business & Finance ➔ Taxes ➔ United States
if you pay him under the table, you get no IRS break and could be in big legal trouble for doing so. You'd get fines and penalties.
2007-08-09 03:23:07 · answer #1 · answered by Anonymous · 1⤊ 0⤋
Hiring someone "under the table" may sound good for every body but it can be a major problem for all of you. First of all it is illegal. If that does not mean anything to you or the "employee" that is your issue.
The real danger is when a box falls on this kids head and he applies for workers comp benefits or disability. Mom & Pop could be spending their Sundays in Jail or the poor house.
The suggestion that the IRS or any agency is going to give you or the employee a break because you pay the rest of your taxes just not realistic.
Have you given any thought to the possibility that should all of the people who pay under the table were to pay their fair share of taxes that yours and mine could be less. Are they stealing from the goverment or you?
2007-08-09 12:28:01 · answer #2 · answered by ? 6 · 0⤊ 0⤋
First off, the IRS has more important things to do then worry about some kid making 7 bucks an hour. Many places pay part timers under table. It is not a big deal and unless he is getting paid a great salary (at least 400 a week) then you don't have to worry about it.
I am going on a limb to assume that the majority of these people are well past there teens and young adult hood. I live in a college town, i have grown up in this college town and from my senior year of high school to my sophomore year of college I have always been paid under the table for part time work. In the long run it is safer to do things legitimately but I can name many franchise owned business' along with mom and pop shops that do hire messengers and employees under table and have for years. The world is a different place then when you guys had it, it is much bigger and more corners are cut.
2007-08-09 10:27:14 · answer #3 · answered by hovan21 1 · 0⤊ 4⤋
Do NOT, under ANY circumstances, hire him under those conditions! He would be an employee and must be paid as such. That means withholdings, etc. to stay legal. The IRS will NOT cut you a break on this if they find out. Nor will the CA FTB. It's not worth the risk!
2007-08-09 10:38:36 · answer #4 · answered by Bostonian In MO 7 · 1⤊ 0⤋
It's illegal both for you and for him to set up this arrangement. You would be evading employer taxes, and he obviously intends to evade income tax.
I can sure understand that you need a little time off. But you'd be a lot better off hiring somebody legally. It'll cost you a little more, but you won't have to worry about being caught for doing something illegal. And it's very possible that you WOULD get caught - and if he gets caught, the trail would lead right back to you.
2007-08-09 10:54:01 · answer #5 · answered by Judy 7 · 1⤊ 0⤋
My concern would be, if the person asked for the job under these conditions, what else would he be dishonest about?
Meantime, if you want to avoid the taxes/workman's comp issue, just pay him as a contractor and issue a 1099 at the end of the year. He won't like this though and will probably not take the job.
2007-08-09 10:51:59 · answer #6 · answered by mommanuke 7 · 1⤊ 1⤋
no way -- no way = look i realize that you will have to pay workers comps and everything else but in the long run it is well worth it -- if you go the other way you are looking to loose the store when the irs get wind of what is going down.
2007-08-09 10:27:38 · answer #7 · answered by mister ed 7 · 0⤊ 0⤋
No.
Find someone to work these shifts legitimately. Why take the risk?
2007-08-09 10:30:46 · answer #8 · answered by Wayne Z 7 · 1⤊ 0⤋