Sunday, April 22, 2007

Cheating

Hello,

I have a problem with my summer employers from last summer. They paid me "under the table" for three and half months last summer.

This year, 2 days before taxes were due, I received 1099s and a note apologizing for the lateness and the new need to file taxes due to fear of being audited.

I was being paid $400 per week even though I worked late nights and overtime frequently. I don't think it's fair that they are suddenly deciding to report my income as freelance contracting even though I never signed anything or agreed to it in the first place. I'm a student who was hired as a "summer intern", all parties agreed that it was supposed to be a learning experience for me, that's why I was paid so little to begin with. I would like to be filed as a W2, but I'm not sure what my rights are. When I brought up the fact that I wasn't able to plan or budget for these unexpected taxes, they asked that I "work off" the taxes. I don't think this is fair.

Please let me know what I can do in this situation.

Thanks, Viny


Hello Viny,

When you were growing up your mama probably told you: Don't cheat. It's wrong and you'll get in trouble. That's just what happened to you. And it could have been a lot worse.

Being paid, or paying someone else, under-the-table, off-the-books or in-the-parking-lot is fraud. You are hiding income. Breaking the law.

You said your summer job "was supposed to be a learning experience." It was more of a learning experience than you bargained for. Look at it as a valuable lesson, learned early. Pay the taxes and think of it as a 4 credit college course.

Best regards,
June Walker

2 comments:

Unknown said...

Thanks for your response, I agree that it's wrong & it was never my decision to do that...In fact I asked about filling out paperwork from the beginning.... - I'm wondering if the fact that I never agreed to being a freelance contracter (never signed anything) has any weight in this situation.....?

June Walker said...

Viny,

If you are self-employed you'll pay both halves of your SE tax. That's self-employment tax and is made up of social security tax and Medicare -- about 15% of your net self-employed income.

If you're an employee your employer would have to pay half, about 7 1/2%. You'd pay the other half.

No matter whether you're self-emloyed or an employee you must pay income tax on the money you earned.

If you are self-employed you may deduct all expenses against your earnings. Because your income would be less you'd pay less income tax and less SE tax.

You could call your local department of labor. They would force the people you worked for to pay their share of your SE tax.

Or you could stay as a self-employed and take deductions.