Paid in moneygram, no taxes withheld...trouble brewing?
I work 24 hrs a week at $9 an hour doing charity fundraising. I am married to a military serviceman, and I believe claimed 0 allowances (no dependants, claimed as dependant by husband only) though I may have entered 1 for my spouse. Either way, a maximum of 1.
I worked at this company in '05, and we received a standard looking paycheck that did have taxes withheld, and listed what was taken in SS, state, etc.
Now, we are being paid in Longs moneygrams, and there is no tax withheld.
Is this legal? Are they just expecting me to total and save my own taxes to pay next April, or is this as fishy as it smells to me? My roommate's paycheck was the same; moneygram, no taxes.
This is my first paycheck from them, could I potentially find myself in trouble with the IRS? And if there is a rat, what should I do about it?
- Bostonian In MOLv 71 decade agoFavorite Answer
It appears that you are being treated as an independent contractor, not as an employee. That is generally NOT legal.
Do NOT wait until the end of the year for a W-2 as one other respondent foolishly suggests. That is the worst possible decision you could make. You'd be in deep doo-doo at tax time if no taxes are being withheld from your wages now.
The first recommendation is to simply find another job. Your "employer" doesn't sound financially sound given they're paying you in money orders and not paying their payroll taxes. That's NEVER a good sign.
You should also file a Form SS-8 with the IRS to get a formal ruling on your status as either an employee or independent contractor. You can download the form from the IRS website. I'd post a link but for some insane reason YA isn't allowing links to the IRS website right now.
If you are determined to be an employee, your employer will start withholding taxes from your pay again. If you are determined to be an IC, you'll need to start making quarterly estimated tax payments using Form 1040-ES as well as estimated tax payments to your state if your state has an income tax.
If you need to make estimated payments you've already missed the first payment; it was due on April 15th. Therefore you need to act quickly on this. File that SS-8 with the IRS immediately, whether you choose to stick with this job or quit and find an honest employer. You'll still owe taxes for the income you've earned so far and need to know what your legal status is.
- 1 decade ago
If you completed a W4, request a new one to complete - you should complete one every year.
If not, I suggest you request something in writing that states that you ARE an independent contractor which means you MUST be responsible for your own taxes on earning.
They should at the end of the year send you a 1099 instead of a W2 if no taxes are being withheld per pay period.
A money-gram check should be cashable at any check cashing institution.
Again, I advise you to check your employee status, W2 employee or Independent Contractor?
- Daniel ELv 41 decade ago
Keep any records you get as far as what you are paid, and you will pay taxes at the end of the year. No idea why the change, but apparently they are not withholding your taxes for you, which does happen sometimes with independent contractors.
If you don't get a W2 at the end of the year, worry. and take everything you have to a good CPA.
- Sophie BLv 71 decade ago
doesn't sound right... companies are required to withold fed. taxes..over a certain number of hours worked