What to do if you’ve been paid under the table is one of the most perplexing areas of the tax world. The short answer is that even if you haven’t gotten a W-2 or 1099 form, you still have to submit taxes.
To decide whether someone is an independent contractor or an employee, the IRS has particular standards. The relationship between the employee and the employer, financial control, and behavioral control are the three key contributing elements. The degree to which the employer has control over the employee’s behavior and output at work is referred to as behavioral control. The degree to which the employer manages the financial facets of the employee’s job is referred to as financial control. The nature of the overall working relationship between the employee and the employer is referred to as this relationship.
Being an independent contractor is distinct from being an employee in that you are seen as self-employed. You must pay your own taxes as an independent contractor, including the employer and employee components of Social Security and Medicare taxes. To report your income to the IRS and your state tax authority, you must utilize IRS Form 1099-MISC.
For example, income received as a freelancer or independent contractor is not reported on a W-2 and must instead be reported on a 1099 form. You must include any income you received after receiving a 1099 on your tax return. You still need to disclose your income to the IRS even if you haven’t gotten a 1099.
In conclusion, it’s crucial to submit taxes, even if you received a secret salary. You must use the relevant IRS forms, such as the 1099-MISC, to report your income if you are a self-employed individual or independent contractor. To make the tax filing process as simple as possible, keep accurate records of your income and expenses throughout the year.