question on taxes (never filing)

Micheal · #21 10/14/11, 07:43 AM

I'm with snoozy's answer....... it just ain't your problem.
Inform him that if'n he wants to work for you he will be given proper (tax) paperwork at the end of the year. It should not be your concern on whether or not he files.

Old John · #22 10/14/11, 08:02 AM

I can't help with this situation, similar story, though.
But........I worked with a musician a long time ago, (over 30 years), who Hated Taxes and giving them to the Government.
And every gig we played, as part of the Trio, they'd ask for a Soc.Sec.Number. The Places didn't take out the Taxes, but turned us in as miscellaneous labor.(I think)

The lady who played keyboards with us and myself would give our S.S.# and pay the Taxes by turning in the Income.
The other guy, would give a different S.S. number, for every gig we did. So he never turned it in as income or paid the taxes.
I wonder what ever happened to that old boy? He was a really good lead guitar & banjo player.

ET1 SS · #23 10/14/11, 08:46 AM

Keep in mind that even with reported incomes, there is a minimum income level that if you earn less than that amount, you are not required to file income taxes.

Whatever that current level is, just pay this guy that amount.

TnAndy · #24 10/14/11, 09:07 AM

Wow.....you're assuming a LOT !

Quote:

Originally Posted by Shadow

Your husbands friend pays no taxes in trouble with the federal and state tax people does not pay his share of everything the taxes pay for that we all enjoy (I know they waste a lot) but we do get roads, schools, ect.

I always hear the "roads/schools" argument.....well, the roads are paid for by fuel taxes....so unless has managed to figure out how to not pay them at the pump, he HAS paid for the road he drives on. Schools are paid for, by and large, by property taxes......so again, unless the guy is living under a bridge, he IS paying for them as well ( even if he rents....it's in the rent )

Quote:

Originally Posted by Shadow

He gets sick goes to the ER and they put him in the hospital and all the other tax payers pay for his treatment.

.

Again, HUGE leap of assumption. Heck, he may be able to afford, and have, a Cadillac health insurance because he managed to keep the Feds out of his wallet all these years !

Same for retirement. I know guys that worked in a cash business all their lives, and took enough "off the top" that they are better set for retirement than most of the general population that supported foreign wars and the welfare state by having their paychecks reduced before they ever saw them.

Quote:

Originally Posted by Shadow

Now you help him and you want to know what my problem is. This kind of going around the law, going under the table, is a big part of our goverment woes. I am sick and tired of paying his part. If he gets caught, and he will, the tax people are going to audit your buisness. Tell your husband no and if he insist tell him you will not be a party to tax fraud that could cause you to lose everything you have worked for. DO NOT KICK THE SLEEPING DOG OR THE IRS.

Uh, I don't think the OP was talking about being a party to tax fraud....merely concerned about he repercussions of sending in a W-2 when this 50 year old guy has never filed.

Personally, I don't think the OP is going to have ANY problem.....guys shows up, you hire him, and file the paperwork the govt wants, along with the tax. The OP isn't responsible for this man's past decisions.....the man is.....and is the one who will have a fight with the govt.

ldc · #25 10/14/11, 10:58 AM

Just wanted to add to this discussion, that the IRS doesn't make reasonable assumptions about working stiffs' income, in my experience. About 30 years ago, in another state, someone I know was turned into the IRS by a former girlfriend (anyone can do this anonomously, and if proven true, they get to keep half of the money the IRS recovers), and he had been painting and doing small home repairs for at least 20 years. Prob'ly not earning more than the amount you don't pay tax on, if you were to file. Anyway, the IRS assessed his income to be about 6 times the minimum for the 20 yr period, and gave him 12 months to pay several hundred thousand in back "guesstimated" taxes. If they had ever visited where he lived, they would have seen that he lived in a 10 x 12 shed, in someone's yard w/ no modern conveniences. This is all by way of saying that the IRS is not a genius at determining someone's true lifestyle. Hope the OP and family friend stay out of trouble.

ET1 SS · #26 10/14/11, 11:11 AM

A married couple can earn $17,500/year before being obligated to pay any income taxes.

Married Filing Joint your standard deduction is $10,700

[Of course if you had any of the following then your deduction may be much higher:
Medical, dental, prescription drugs, and other health care costs,
State and local income taxes or state and local sales taxes,
Real estate (property) taxes,
Personal property taxes (such as motor vehicle taxes and registration fees.
Interest paid on a home mortgage,
Interest paid on investments (such as margin interest),
Cash contributions to charities and churches,
Non-cash contributions to charities and churches,
Personal losses because of theft or casualty,
Job-related expenses that your employer did not reimburse you for,
Union dues,
Cost of purchasing or cleaning uniforms,
Job-related education and professional development,
Job-related travel,
Home office expenses,
Tax preparation fees,
Investment fees and expenses,
Safe deposit box fees,
and gambling losses.]

Then the personal exemption is $3,400 for each person. $6,800 for a couple.

The standard deduction plus the exemption is $17,500
[ $10,700 + 6,800 = $17,500 ]

Of course if you own a home and have health insurance or medical expenses it will likely be much more.

The first $17,500 that any married couple earns is tax-free. [and if you have any of the other write-offs I listed than it may be higher]

Plus there is a separate topic of itemizing.

If this guy is single, his level of tax-free income is lower. But my point is that it still exists.

Lizza · #27 10/14/11, 11:16 AM

Thanks for the story about your friend IDC, I think that is his basic concern.

Hey Shadow, no problem at all, it is hard for us all with tax dodgers and those that generally suck off the system. Although in this case he has only hurt himself as he never made enough to not qualify for government assistance, it was his previous employers who really reaped the rewards (although to do that they themselves must have been making cash off the books).

Hubby went over and talked to him last night and told him he couldn't do small jobs and what not for us and he had to fill out a W4 if he wanted to work for us. Friend was pretty bummed and in turn my husband also felt badly last night but our hands are really tied. He tried going around yesterday to find under the table jobs and couldn't find any. I will still talk to my accountant about what happens for people that turn in their first tax return at almost 50 years old.

Lizza · #28 10/14/11, 11:21 AM

Thanks for the breakdown ET1, really you can make much more and get much more back. I have friends that make (I think $24K) with two children, they paid zero in taxes and got back $6K in earned income credits and then gets almost $700 a month in food stamps, plus heating assistance every year. So really your income can be much higher with children and get much more back then you paid in. Being on the grid so to speak pays out when you are in the lower income brackets. My husband tried to explain to him that by getting regular income he can at least apply for food stamps. We'll see.

rambler · #29 10/14/11, 12:52 PM

I think the problem is, even if he earned so little for the past 30 years that he never would have owed any income taxes, there are 'issues' with not filing if you earn $400 or $600 or so as someone mentioned.

Then how does he fix the past 6 year of time, the gvt may asasume he earned some certain amount, and he will need to show he didn't. And there can be penalties for not filing, which get added on, even if no taxes were due - fines will be for not filing.

In the odd-jobs line, he likely will be defined as a contrarct worker, and so will have owed SS taxes, those kick in at very low amounts.

A lot of intreresting thought in this thread. It seems a lot of us agree is will be in good shape as far as taxes intot he future.

The problem is, how will the govt handle the past, which is what the original question was.

--->Paul

texican · #30 10/14/11, 09:34 PM

The US Marshalls might come pick him up.... 50 years old, and a 'ghost'? That sends up red flags with me. Has hubby known him all his life, or just a couple of years?

A couple were living on a chicken farm nearby for ages... they were quiet, never went out... one night his mug was shown on America's Most Wanted, and apparently they didn't watch the show... a neighbor did and turned em in.

Sometimes folks are 'off the grid' for a reason......

Qhorseman · #31 10/14/11, 10:22 PM

I have a friend that has never filed a tax return in his life. Has paid into SS and medicare. He is drawing SS and medicare.

Lizza · #32 10/14/11, 10:40 PM

Hubby has known him for a very long time (over 25 years), for whatever reason he just has never gotten a regular job.

Interesting horseman, I would have thought the IRS would come knocking at some point.

You are right Rambler, I do think there is a lot of interesting information in this thread.

wagvan · #33 10/15/11, 02:56 PM

I have heard of other people in that situation who hired a tax guy, filed the past 7 years returns showing their paltry income and got refunds, then they were on the books. Not sure of the details or if there were fines that came along with that. But from what I understand, there is a way of doing that and the IRS is more gracious when you are the one initiating it. Perhaps your accountant knows how to do it and could offer it pro bono or you could pay the costs as a gift for the employee. The employee might do it if you can show him that he will get refunds in the future. He might also be able to get some state refunds like a heating credit, etc.

Lizza · #34 10/15/11, 04:07 PM

Great help wagvan, I really appreciate it. My appointment isn't until the 26th but I will definitely bring that up with my accountant.

Joshie · #35 10/15/11, 04:23 PM

Quote:

Originally Posted by zong

Give him a job as a subcontractor, pay him, send a 1099 at the end of the year. He can worry about his taxes and social security. A subcontractor must be given a job to do, and a contract(either oral or written), and not be an hourly paid employee trying to avoid the IRS and such. If you guys can work all that out, you're all good. In some states, he needs to have a license. Inexpensive here.

You can't really do that if he works only for you and comes to work at your place of business daily. A friend of mine was hired that way and her employer got in huge IRS hot water.

It's not exactly ethical anyway. Your friend has shot himself in the foot by being unethical. If he becomes disabled he's pretty much outta luck. Your friend would be best served to start working on the books. I don't see how he'd be eligible for Medicare without five years of work or a spouse without a work history. If he became disabled he'd probably be able to get SSI. If he's never paid SS/Medicare taxes he's going to be in big trouble.

If his income has always been very low he might not even have been required to pay taxes. He'd be best served to pay taxes now. It'd cost him less if he works for you as you'd be responsible for the employer portion of his taxes. If self employed he's responsible for paying the total tax.

Melissa · #36 10/15/11, 04:24 PM

Quote:

Originally Posted by ET1 SS

A married couple can earn $17,500/year before being obligated to pay any income taxes.

Married Filing Joint your standard deduction is $10,700

[Of course if you had any of the following then your deduction may be much higher:
Medical, dental, prescription drugs, and other health care costs,
State and local income taxes or state and local sales taxes,
Real estate (property) taxes,
Personal property taxes (such as motor vehicle taxes and registration fees.
Interest paid on a home mortgage,
Interest paid on investments (such as margin interest),
Cash contributions to charities and churches,
Non-cash contributions to charities and churches,
Personal losses because of theft or casualty,
Job-related expenses that your employer did not reimburse you for,
Union dues,
Cost of purchasing or cleaning uniforms,
Job-related education and professional development,
Job-related travel,
Home office expenses,
Tax preparation fees,
Investment fees and expenses,
Safe deposit box fees,
and gambling losses.]

Then the personal exemption is $3,400 for each person. $6,800 for a couple.

The standard deduction plus the exemption is $17,500
[ $10,700 + 6,800 = $17,500 ]

Of course if you own a home and have health insurance or medical expenses it will likely be much more.

The first $17,500 that any married couple earns is tax-free. [and if you have any of the other write-offs I listed than it may be higher]

Plus there is a separate topic of itemizing.

If this guy is single, his level of tax-free income is lower. But my point is that it still exists.

He would still owe self-employment tax if he did not work for an employer.

Also, there are amounts under which you are not required to actually file a tax return. So if you are not anticipating a refund, you don't always have to file.

#37 10/15/11, 04:29 PM

I contracted for a real estate company for a number of years. Because they kept me busy and paid me pretty good, I didn't do any work for anybody else. It was completely legitimate. I was a contractor, had a license, and every job I did for them was a separate project. I would go do this for $25 or that for $100 or the other for $2500. Neither the real estate company, myself, or the IRS had any problems with that arrangement whatsoever. At the end of the year, I got a 1099, and I did my taxes, and paid both sides of the SS payments. I would say that in all probability, I worked for those people on 250 to 300 days out of the year for at least 3 years.

Lizza · #38 10/15/11, 07:46 PM

I think there are 25 or 30 reasons of why they may or may not be a 1099 sub-contractor but the one that made the most sense to me, is if the other person set their own hours and prices. This is from my SBM class (small business management) not straight from the tax books, of which I think there is something like eighty thousand pages in all of tax codes, rules, and regulations.

I'm not going the 1099 route, it's a W4 or nothing. I do have people I 1099 but those are people like the guy that does my signs or my 3D drawings.

Thanks to all about the ideas, it's been really helpful. I will update this thread after my appointment.

ET1 SS · #39 10/15/11, 08:50 PM

Quote:

Originally Posted by Melissa

He would still owe self-employment tax if he did not work for an employer.

Also, there are amounts under which you are not required to actually file a tax return. So if you are not anticipating a refund, you don't always have to file.

Absolutely, I said that up in post #23

NickieL · #40 10/15/11, 11:49 PM

around here, a tax for the schools does not come from property tax...it comes from income tax! I know because I work in a diffrent county then where i live and they take out for BOTH counties for the schools.

but like others said, if he won't work legally for you then he doesn't need the work that bad. It's not worth the trouble for you.