First off, I’ve got to tell you the Wall Street Journal certainly has some high level journalists on staff. Jonnelle Marte, who authored this article, The Perils of ‘Off the Books’ Jobs really spent a lot of time with me until she got the facts straight. I am very impressed by her research into a field that’s pretty difficult to understand.
She quoted me as saying:
“Not only are you risking a huge amount of penalties by not claiming all your income, you’re also losing out on a lot of the benefits,” says Anthony Parent, founding partner of IRS Medic, a Wallingford, Conn., tax law firm.
So what do I mean by that, besides social security?
Well…
What happens when the person who paid you in cash is the target of audit?
If someone who is paying you is the target of an audit, it is likely that they are going to spill the beans. Otherwise they will not only have to pay taxes on what they paid you, but also onerous serious penalties. And then after they point the finger at you, what do you think the IRS will do with that information? Send you a Valentine?
What happens when you don’t get paid? What proof do you have that you had a job?
If you’re on a cash-only basis you have no recourse if your employer decides not to pay you.In that situation, you are stuck. And if there is something in writing, then that person can blackmail you with proof showing that you evaded taxes.
Has your spouse ever signed a return joint with you?
By not reporting your income, you’ve make them liable for all your unreported income.What kind of strain is that going to put on your marriage?
Do you like asking people to co-sign a car loan for you?
Even if your credit is good you will not be able to verify your income if you’re paid in cash. If bank cannot verify your income, you won’t get a loan by yourself. No loan means no car, so you better beg your mom to co-sign if you want a car. And a home mortgage is now out of the question
Transcripts are required for an increasing number of jobs.
It is not uncommon for potential employers to have you sign a 4506-T form.This is especially relevant for higher paying jobs. If a potential employer has a 4605-T signed by you they have the ability to see what you’ve been making and see if you have been honest, an important quality to most employers. And then how are you going to justify a 6 figure salary when a prospective employer sees that you’ve never reporting income that close —ever?
Think about it, man.
By taking cash payments to avoid paying income tax you are sending a daily message to yourself that you will always be too small of a fish for the IRS to care about. Get it? You are telling yourself that you are going nowhere. In my experience, people who make those choices end up eking out a meager existence, floating from dead-end to dead-end. They find themselves constantly looking over their shoulders, never being able to fully claim credit for what they’ve done, and always being at the mercy of another’s goodwill. It is not a crime to owe the IRS money, but it is a crime to lie to them. Working under the table is a deal with the devil. And it is no bargain.
Well said, Attorney P.
Well said indeed.
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