pick a tax form, any tax form

January 8, 2011 12:45 AM

How do I file taxes?

I made no more than $5,000 last year while working under the table as a caregiver for my awesome boss. Do I need to file taxes? Does your answer change if I want to file the FAFSA? I live in California, if that is necessary information.

I will keep working for my boss this upcoming year, making about twice that. Will I have to file taxes if I make ~ $10,000 under the table? What can I expect to owe? (I graduate in the spring, so the FAFSA won't be a concern next year, but I'd still like to do it right.)

So my main question is: what form(s) do I need to fill out without involving my employer in paperwork?

Thanks!

posted by lover to Law & Government (14 answers total)

You would be in the 10% tax bracket, and probably qualify for the EITC (but check here anyway) which would give you a tax credit of $457 assuming you have no children. So you probably owe a little bit of federal tax. Don't know anything about state tax or social security.
posted by Rhomboid at 1:12 AM on January 8, 2011

Oops, first link was supposed to go here.
posted by Rhomboid at 1:13 AM on January 8, 2011

The most important questions here: are you a full time student? And is anyone else going to list you as a dependent on their taxes for 2010? If either of those are true, you probably aren't required to file.

I'm also pretty sure that someone making $5000 a year has little to no tax liability. Which means you probably won't owe much if any money. I'm not sure whether that means you shouldn't file, though.

If you're a traditional undergrad, being largely supported by your parents and under 25 (and you're not married, a parent, or in the military), I'm not sure your own income is taken into account on your FAFSA. You'd probably be considered the responsibility of your parents. Someone at your school's financial aid office can probably advise you about that.
posted by Sara C. at 1:22 AM on January 8, 2011

Every United States citizen or resident has to file if you've earned money or filed taxes before, even if you don't live in the country[1]. Whether you owe any taxes or not depends on how much you made. The standard deduction for 2010 in the US is $5,800 so you likely won't owe anything. (Obviously, you'll have to run the numbers yourself.)

The 1040EZ will probably get you done for federal taxes. I can't speak to California forms.
posted by kdar at 1:24 AM on January 8, 2011

Response by poster: I'm a full time student in my late 20s, independent, and with no dependents.

The 1040EZ requires a w2, which I don't (and won't) have.
posted by lover at 2:14 AM on January 8, 2011

If your boss isn't reporting paying you then filing taxes is going to raise red flags. I'm going to leave it at that!
posted by fshgrl at 2:41 AM on January 8, 2011 [4 favorites]

OK there are a few issues here. When you say you are being paid "under the table," do you mean untraceable cash? Because the point of doing this is, in most cases, to avoid tax liability. It's illegal. When you say your employer can't provide a W2, I assume this means he's not paying the FICA tax associated with employing you. Illegal as well. If he's employing you as a private contractor, you are responsible for paying the FICA.

I can't recommend you dodge these problems, but I'd say most of the folks who work for cash don't bother with their taxes. But bad things could happen...
posted by Marky at 2:50 AM on January 8, 2011 [3 favorites]

It would not be possible for you to file without 'involving your employer.'
posted by fixedgear at 4:18 AM on January 8, 2011

Best answer: If your filing status is single and your income is less than $9350, then you are generally not required to file. http://www.irs.gov/instructions/i1040ez/ar02.html#d0e677

from what I remember of the FAFSA there is an option to say that you weren't required to file a return.

Now, the fact that you did not pay any FICA taxes does present an issue. You aren't really self-employed, but would probably have to file as if you were to compensate for paying these taxes. For self-employed, the minimum income for filing is $400. ...your risk if you do not do this...? - probably small - ....but IAN your tax attorney/accountant, so I can't say.
posted by melissasaurus at 5:51 AM on January 8, 2011 [1 favorite]

There's no such thing as an under-the-table work arrangement being done right, because "right," (i.e. legal) means above the table. Doing it above the table means that either you're an employee, which would require your employer to file appropriate taxes and give you a W2, or you're in business for yourself and your boss is actually your customer, not your boss. If you're in business for yourself then you file your taxes as a business, and pay your own FICA. At a minimum I think you'd need to file a regular 1040, plus a schedule C-EZ. Note that FICA is not what's generally referred to as "income tax," even though it's a tax based on income. Even if you don't owe income taxes because your income is so low, you do owe FICA, and it's not an insubstantial amount. It sounds as if you'll be on the hook for $700-$800 bucks for this past year (though that might be reduced by the EITC).

"Under the table" is generally a consensual arrangement where you're neither an employee nor a business owner in the eyes of the law, because the law doesn't know that you're working at all. You're part of the black market for labor (sounds so sinister, doesn't it?). Your employer is getting your services for cheaper than they could get them if taxes were being paid. You're probably getting more money too, again because the government isn't getting a cut. You're both also avoiding a bunch of paperwork that hardly seems worth it for such small amounts of money. This sort of arrangement is very common, but it is illegal. The longer you do it, and the more money you make this way, the more likely it is to bite you on the ass.
posted by jon1270 at 5:55 AM on January 8, 2011 [2 favorites]

1040-EZ instructions, from the IRS. Go to page 7.

If you make less than $9,350, and if nothing in Chart C applies, you don't have to file.

That said, it sounds like next year you might be over that line. At that point, it's kind of up to you. If you really truly are paid 'under the table', you can't really file, not without getting your employer in trouble. Which leads to the possibility of Bad Times down the road, esp. with FAFSA.

If you want to be legal--and if you want to file FAFSA, you probably do--but your employer doesn't want to deal with employee-related things, just have them give you a 1099 instead of a W-2. Then the onus is on you for handling tax-related stuff, but it's all legal.
posted by criacow at 5:57 AM on January 8, 2011

It sounds as if you'll be on the hook for $700-$800 bucks for this past year...

On further thought, I just don't know enough to be tossing out specific numbers like that. Sorry.

FWIW, you might be interested to read this to get an idea of what your boss is supposed to be doing.
posted by jon1270 at 6:12 AM on January 8, 2011 [1 favorite]

Best answer: If you make less than $9,350, and if nothing in Chart C applies, you don't have to file.

From chart C:

"You must file a return using Form 1040 if any of the following apply for 2010.
• You owe any special taxes, such as social security and Medicare tax on tips you did not report to your employer or on wages you received from an employer who did not withhold these taxes."

"Social security and Medicare tax" is another way of saying "FICA."
posted by jon1270 at 6:20 AM on January 8, 2011 [1 favorite]

3rding or 4thing the under $9350 rule - you don't have to file. That said, I was in the same position with financial aid, and filing made the process easier and faster. When I didn't file, I had to write a letter stating that I didn't file and send it to my school's finaid office and the financial aid department of my state (NJ), which wound up being more complicated than actually filing. When I did file, nobody asked questions.
posted by sarling at 7:16 AM on January 8, 2011