‘Under the Table’ payments are payments employers make to their employees without any proper forms or tax filing. Usually, this type of payment is submitted in cash and the employee works undocumented. With ‘under the table’ payment, employers pay their employees and the employee avoids taxes taken out of his or her check. So, what’s the harm? Well for starters, this method of payment is illegal! Here’s what you need to know about accepting ‘under the table’ payment.
Legality Purposes
You may be thinking your employer is the only party that would face legal punishment for not paying their employees properly, but employees are at fault as well. By knowing you’ve been getting paid under the table and not reporting it to the IRS, this is similar to being guilty by association. You could potentially face fines for false reporting, no matter your innocence! Taxes are in place for a reason and it may seem like an easier option to accept the payment and move on, but you have to think of yourself and your wellbeing first.
Income Tax Problems
Along with the legal trouble that comes with accepting payments under the table, you may also run into issues during tax season. If you don’t report all of your payments you’ve received on your tax return, you may be charged interest on the amount of back tax and penalties you owe. By accepting cash only payments, it makes it difficult for you to file your taxes.
Compromised Benefits
Whether it’s a small part-time job or a full-time career, most companies offer their employees benefits for their employment. Health benefits, social security, 401k matching, and paid vacations are just to name a few. If your employer chooses to pay you under the table, it’s not documented that you’re not receiving these benefits. In addition, you won’t have any legal rights if you were treated poorly on the job, or given no payment for overtime hours or discrimination.
Know Your Worth!
From missing out on benefits to facing legal action, it’s safe to say being paid under the table just isn’t worth it. Know your worth! Before you enter a job, understand what you should expect as an employee. Create an open and honest relationship with your employer; you know what under the table payments could do so educate your boss!
At Camino Federal Credit Union, we put our member’s financial well-being first. If you would like to learn more about how we can help you with your finances, please contact us at 800-835- 3400.