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Old 03-18-2018, 10:06 PM
 
Location: SW Missouri
15,849 posts, read 31,496,794 times
Reputation: 22457

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I own and operate a business. Last year I grossed about $20,000. I have people who assist me with my business that I pay out of my own pocket. As long as I do not claim these payments as "expenses" and pay taxes on the gross amount, does the IRS care? Obviously, all they care about is getting their money, so, if I pay what I owe in taxes, on the money I receive, do they care what I do with the rest of it? i.e. pay someone to help me.
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Old 03-18-2018, 10:32 PM
 
Location: North Idaho
24,652 posts, read 32,297,954 times
Reputation: 50002
I'm sure the IRS doesn't care if you don't take all the deductions you are entitled to. The problem you might get into is you are supposed to notify the IRS whenever you pay another individual over a certain dollar limit and it's possible that you might owe social security taxes on the money that you paid to your employees.
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Old 03-19-2018, 10:42 AM
 
Location: East of Seattle since 1992, originally from SF Bay Area
32,355 posts, read 58,985,001 times
Reputation: 35389
Yes, the IRS wants their income tax. If you are paying people to do work for you then you should be withholding income tax, SS and medicare tax, and state unemployment and disability. If these people helping you are self employed contractors the IRS requires 1099 forms if you pay them more than $600 in the year to report their income. Whether you claim their pay as business expense or not, the IRS will cause you grief if they find out. That doesn't seem likely, but if audited, they might want to know where that additional revenue went that you have not reported as income and no offsetting expense in your records.
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Old 03-19-2018, 12:09 PM
 
Location: Locust Fork, AL
851 posts, read 699,473 times
Reputation: 2395
I would be more worried about the state, than the IRS. The IRS simply doesn't have the resources to audit small businesses. So unless you are claiming tons of expenses that you normally don't claim, you won't be bothered. The state is completely different. They will aggressively pursue you, no matte what you owe. If someone reports you for avoiding the workers comp, unemployment insurance requirements, the state will shut you down.
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Old 03-19-2018, 03:59 PM
 
Location: 5,400 feet
3,057 posts, read 2,925,335 times
Reputation: 4506
There are specific regulations that define employees vs. independent contractors. You appear to be treating them as independent contractors, which they may well be, so you should be reporting their income to the IRS and to them on a 1099 so they can be taxed and pay their own social security tax (above a certain threshold, used to be $600). You could then deduct what you paid them. If they are employees, then you are likely violating the law by not reporting their wages, not withholding income and social security taxes and not paying the employer portion of social security.

What you are doing may never come to light, except when you get reported to the IRS and/or the state by someone you make unhappy or one of your helpers decides that they are an employee and files a complaint against you.
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Old 03-21-2018, 11:12 PM
 
Location: North Idaho
24,652 posts, read 32,297,954 times
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People who work expect to draw social security and Medicare when they retire. If you've never reported their work or paid their taxes (employer pays half, employee pays half) they might not have enough quarters to qualify for social security. That's one way that you can be reported and caught.
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Old 03-23-2018, 05:50 AM
 
Location: The Triad (NC)
30,233 posts, read 66,770,090 times
Reputation: 35721
Quote:
Originally Posted by 20yrsinBranson View Post
I own and operate a business.
I have people who assist me with my business that I pay out of my own pocket.
Last year I grossed about $20,000.
How much did you NET after your payroll expenses?

Quote:
As long as I do not claim these payments as "expenses" and pay taxes on the gross amount...
How illegal are your employees that you think this makes better sense?

Quote:
Obviously, all they care about is getting their money, so...
Turn off FoxNews.

Quote:
if I pay what I owe in taxes, on the money I receive,
do they care what I do with the rest of it? i.e. pay someone to help me.
Yes they do. And so will your state authorities. Not just the tax dept.
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Old 03-25-2018, 11:38 PM
 
Location: near Fire Station 6
987 posts, read 408,385 times
Reputation: 827
Quote:
Originally Posted by 20yrsinBranson View Post
I own and operate a business. Last year I grossed about $20,000. I have people who assist me with my business that I pay out of my own pocket. As long as I do not claim these payments as "expenses" and pay taxes on the gross amount, does the IRS care? Obviously, all they care about is getting their money, so, if I pay what I owe in taxes, on the money I receive, do they care what I do with the rest of it? i.e. pay someone to help me.
Your gross was 20K? For the entire year?
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Old 03-26-2018, 07:18 PM
 
Location: SW Missouri
15,849 posts, read 31,496,794 times
Reputation: 22457
Quote:
Originally Posted by lostsoul359 View Post
Your gross was 20K? For the entire year?
It's a seasonal job. That was for 6 months of the season, but after 6 months the work, essentially stops.
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Old 03-26-2018, 07:20 PM
 
Location: SW Missouri
15,849 posts, read 31,496,794 times
Reputation: 22457
Quote:
Originally Posted by MrRational View Post
How much did you NET after your payroll expenses?
Not much. Probably, at the most $4,000


Quote:
Originally Posted by MrRational View Post
How illegal are your employees that you think this makes better sense?
They aren't illegal, they just don't want to be bothered with it.

Quote:
Originally Posted by MrRational View Post
Turn off FoxNews.
Never watch it

Quote:
Originally Posted by MrRational View Post
Yes they do. And so will your state authorities. Not just the tax dept.
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