Finances: Advice, Woes and all things Money!

[Anita18]

I bank with Wells Fargo but this is not going to be 10-99 till later so I don't want to pay taxes on it. I'll be making at least $500-$600 and that's a very conservative estimate. When I start doing this full time I'll be 10-99 and have a tax guy to help me with all that but to start it will be cash money under the table. And yes I do trust this guy very much so

Well, Wells Fargo won't be paying taxes out of it for you, that's your responsibility. They won't ask questions, they just move money for you. So I don't quite understand why you feel you need to move it all to a pre-paid card?

So as long as you keep track and you KNOW this guy isn't viewing this as a business expense, I don't see the issue with just putting it in your account. It's not like the IRS radioactively doses cash to track it, Batman-style. The IRS only cares if you claim a business expense when you have no income to report. That's the part that looks fishy, not that you dared to keep a few hundred in your part-time job which might as well be a hobby.

 

[DJ_KiDDvIcIOUs]

But if I get audited I will have to explain why I have large cash deposits that I didn't report as income came from. Since my buddy is hooking me up under the table I can't say he just gave me large chunks of cash every Monday because then they will audit him

 

[ComicChick]

i'm pretty sure what you want to do may be kinda illegal, so i'm not touching that one

 

[DJ_KiDDvIcIOUs]

It's only illegal if you get caught

 

[Anita18]

But if I get audited I will have to explain why I have large cash deposits that I didn't report as income came from. Since my buddy is hooking me up under the table I can't say he just gave me large chunks of cash every Monday because then they will audit him

How long do you plan on working with this guy without a 1099? I think you have a bit of leeway when it comes to time. If it's less than a year, you have time to figure it out. If you plan on doing this under the table thing more than a year, you need a much better business strategy.

If it's under $600 total, I don't think he needs to file a 1099 at all.

 

[DJ_KiDDvIcIOUs]

No I'll probably be getting at least $1,000 every Monday in cash doing it from home right now. We won't be without a 1099 for very long though, this is just to start. We are working out the kinks in the company and making sure it all goes smoothly to start

 

[chaseter]

I find it absolutely disgusting that your country forces you to pay medical bills for your wife to have a baby. As if a child is not already hard enough on the finances, you have to pay the hospital as well.

This disgusts me, it really does. I feel for you, Destructus.

Healthcare isn't free anywhere so the notion of it being free is ridiculous. Countries with UHC pay higher taxes to pay for healthcare. Since it's removed before the money hits your bank, it creates a sense of it being free, which it's not.

Now the cost of healthcare is agreeably anger worthy.

 

[Anita18]

No I'll probably be getting at least $1,000 every Monday in cash doing it from home right now. We won't be without a 1099 for very long though, this is just to start. We are working out the kinks in the company and making sure it all goes smoothly to start

If it's going to be $1000 every week for more than 3 months, I would file. That's when you need to pay estimated quarterly taxes as a self-employed individual.

Putting it on a pre-paid card still means there's a paper trail of some kind. Someone would have a receipt somewhere. Cash is the only thing that's anonymous. So either you invest in a very good safe and security system (or spend it all every week) or you suck it up and file that.

 

[chaseter]

What's the best way to hide money from the IRS? I'll be getting paid under the table to stat off my new side business and don't want Uncle Sam poking around those funds. I was thinking about putting it onto a pre-paid Visa but I buy a lot of stuff online and want to make sure I can still do that. Never had one before so what do you put in when it asks for a billing address and name on the card? Also are you able to pull cash out back off of them at an ATM? I'm sure they will tack some fees onto it but that won't really matter to me

I hope you get caught and I can't believe you are genuinely interested in trying to not be a tax payer for a Country whose utilities you utilize every day at the expense of others.

 

[ComicChick]

Healthcare isn't free anywhere so the notion of it being free is ridiculous. Countries with UHC pay higher taxes to pay for healthcare. Since it's removed before the money hits your bank, it creates a sense of it being free, which it's not.

Now the cost of healthcare is agreeably anger worthy.

i pay almost $300 a month for mine, and i'm single with no kids. i still have to pay copays, and emergency room visits are at least $125

 

[DJ_KiDDvIcIOUs]

If it's going to be $1000 every week for more than 3 months, I would file. That's when you need to pay estimated quarterly taxes as a self-employed individual.

Putting it on a pre-paid card still means there's a paper trail of some kind. Someone would have a receipt somewhere. Cash is the only thing that's anonymous. So either you invest in a very good safe and security system (or spend it all every week) or you suck it up and file that.

I hope you get caught and I can't believe you are genuinely interested in trying to not be a tax payer for a Country whose utilities you utilize every day at the expense of others.

Again this is only for a very short amount of time and then I will be 1099 and paying taxes each Year. If you wanna be pissed at somebody Chaseter you can start with all the corporations that duck out on billions in taxes each year because of loopholes, not some guy dodging a grand or two

 

[ComicChick]

he might be mad at them too (aren't we all), but you're blatantly asking for a way to cheat the system here. you're the one we can see, not the faceless people at the corporations

 

[Anita18]

Again this is only for a very short amount of time and then I will be 1099 and paying taxes each Year. If you wanna be pissed at somebody Chaseter you can start with all the corporations that duck out on billions in taxes each year because of loopholes, not some guy dodging a grand or two

Right, but you have a shorter leeway for time because freelancers have to pay estimated taxes quarterly. I mean, it's likely you could just "forget" and not pay it for a year without it looking fishy (since people with W2s only pay it once a year), but then you'd get penalized and have to pay more at the end of the year.

If it was only a few hundred, fine, whatever, but $12,000 is a pretty sizeable amount to be making without filing it as income, especially if it's going to be regular payments over the course of a few months. That's obviously income for some kind of service. Socking it away in pre-paid cards just makes it look extra fishy.

Any way this guy could give it to you in one lump sum and you can just say it was a gift of some kind?

 

[Anita18]

he might be mad at them too (aren't we all), but you're blatantly asking for a way to cheat the system here. you're the one we can see, not the faceless people at the corporations

I understand that someone wants to find a legal loophole, considering I'm related to someone (myunclecough) who managed to get financial aid for his kids' college educations while my parents didn't, even though he makes much more than them. He is the financial loophole king. But we're now the recipients of his "generosity" so it's hard to stay mad about that.

But you can't get everything you want. Considering the amount DJ's earning and the likely timespan, either he gets that money as a lump sum as a gift 100% free and clear by all parties (the legal loophole), or he files it. Anything else would make it far too obvious he knows he's doing something wrong and is trying to cheat the system.

 

[DJ_KiDDvIcIOUs]

he might be mad at them too (aren't we all), but you're blatantly asking for a way to cheat the system here. you're the one we can see, not the faceless people at the corporations

Honestly I can give a crap less about what some idiot on a forum thinks. Most businesses when they start up are off the books until they can get everything situated and this is no different

Right, but you have a shorter leeway for time because freelancers have to pay estimated taxes quarterly. I mean, it's likely you could just "forget" and not pay it for a year without it looking fishy (since people with W2s only pay it once a year), but then you'd get penalized and have to pay more at the end of the year.

If it was only a few hundred, fine, whatever, but $12,000 is a pretty sizeable amount to be making without filing it as income, especially if it's going to be regular payments over the course of a few months. That's obviously income for some kind of service. Socking it away in pre-paid cards just makes it look extra fishy.

Any way this guy could give it to you in one lump sum and you can just say it was a wedding gift?

Well again this is going to be for less than 30 days if that even. And if I'm not mistaken he is getting paid out in a check with his name on it so I do believe he will be filing taxes on it but he is just giving me mine under the table. And if I go the prepaid route I wouldn't have my name attached, it would be my address but I have 8 roommates so they would never be able to stick me with it

 

[Anita18]

Well again this is going to be for less than 30 days if that even. And if I'm not mistaken he is getting paid out in a check with his name on it so I do believe he will be filing taxes on it but he is just giving me mine under the table. And if I go the prepaid route I wouldn't have my name attached, it would be my address but I have 8 roommates so they would never be able to stick me with it

If it's going to be less than the three months I quoted, it really doesn't matter. As long as you do pay it eventually, because regular payments over the course of a few weeks is obviously income.

And if you go the pre-paid card route without using your name, it might as well be cash, so why bother.

IMO, the safest way to loophole out of this is for everyone to consider it a gift and for him to give it to you in one lump sum. I would file otherwise. I mean, I'm shrewd enough to even consider a loophole, but I'm pretty safe in the actual going about it. I think most business who start off "under the table" have their starting expenses filed as gifts, and the money is given in one lump sum, as a gift should be. You can't get everything you want.



But dude, considering you're calling a global mod "some idiot," I'm not sure you have a lot of leeway for judgement of intelligence.

 

[DJ_KiDDvIcIOUs]

Well the reason I don't want to keep it in cash is because I rent a room with a bunch of roommates and my door could be kicked down very easily so keeping a bunch of cash in there is a stupid move. I don't want to file it because I still owe the gov like 4 grand from the last time I was 1099 and didn't know what I was doing so I'm not trying to tack this on in addition to that. They are already taking my grand tax return and with all this extra money I'll be making I'll pay them off in full too since I owe it to them

 

[Mr.M]

Does anyone know how to allocate funds in your IRA or other investment accounts through Fidelity? I have an IRA with them and want to change my allocation to high growth aggressive yields, but I have limited knowledge. Is there a way to stream line things without having to go about brokers or added fees. Can I just copy and paste a theoretical portfolio to match my desired growth? The site doesn't let me finalize any changes to the hypothetical pie chart of money distribution in various funds (ie. bonds, foreign, etc)

 

[ComicChick]

I understand that someone wants to find a legal loophole, considering I'm related to someone (myunclecough) who managed to get financial aid for his kids' college educations while my parents didn't, even though he makes much more than them. He is the financial loophole king. But we're now the recipients of his "generosity" so it's hard to stay mad about that.

i'm all for legal loopholes. but if it's not legal, then i don't think it should be posted on here because we don't allow for people to post ways to acquire media illegally, so we probably shouldn't tell them how to hide money from the gov't illegally either

But dude, considering you're calling a global mod "some idiot," I'm not sure you have a lot of leeway for judgement of intelligence.

he wasn't calling me an idiot, but no one should be calling anyone an idiot around here.

 

[Anita18]

Well the reason I don't want to keep it in cash is because I rent a room with a bunch of roommates and my door could be kicked down very easily so keeping a bunch of cash in there is a stupid move. I don't want to file it because I still owe the gov like 4 grand from the last time I was 1099 and didn't know what I was doing so I'm not trying to tack this on in addition to that. They are already taking my grand tax return and with all this extra money I'll be making I'll pay them off in full too since I owe it to them

And if you don't associate your pre-paid card with your name, it's just as unprotected as cash. If one of your roommates finds it and takes it, you're just as SOL. So don't even bother, unless you want to leave a paper trail.

And seriously, if you "still" owe the IRS $4,000, it's best you be on best behavior. They already have you on a list, dude.

My uncle gets away with dampening his reported income by giving us gifts, because A) it IS a gift, he just pays careful attention to his tax bracket which is the reasoning for him giving us the gift money in the first place and B) he files everything by the letter. There's no reason to audit him because nothing looks fishy. When you do these things, you can't slip up.

It's quite a different case with you. You've already slipped up by owing them money, and if they catch you purposely hiding away money that's clearly income when you still owe them money, you're going to be in serious trouble.

If you can't get your guy to "gift" you the money in one large lump sum (which depends more on his status with the IRS than yours), file it. Period.

 

[KevanG]

Still waiting for my T4 so I can file. **** I'm broke. I think I'm able to get a few hundred back so that will help a bunch.

 

[Anita18]

Does anyone know how to allocate funds in your IRA or other investment accounts through Fidelity? I have an IRA with them and want to change my allocation to high growth aggressive yields, but I have limited knowledge. Is there a way to stream line things without having to go about brokers or added fees. Can I just copy and paste a theoretical portfolio to match my desired growth? The site doesn't let me finalize any changes to the hypothetical pie chart of money distribution in various funds (ie. bonds, foreign, etc)

I changed mutual funds through Fidelity and it wasn't that hard, although this was years ago and the website has changed. I don't have an IRA with them, though. I'm not sure if that's different? (Although IIRC, "IRA" is just an account type. You can have funds and stocks in an IRA.)

I remember doing my own research and trading my own funds. (The fund that my parents opened for me when I was a kid was performing poorly, so I chose one fund that was performing well and one fund in the medical device industry, which I want to support.)

Doing your own research into which funds to invest in might be what you have to do, because I see a "Portfolio Review" tool but it just gets you tips and Fidelity still has to execute it. And of course that costs money, haha.

 

[PacificBoy]

I'm not from America and I'm not versed in American taxation so I can only offer this friendly advice @DJ: Stop mentioning what you have been mentioning here. I don't think your forum presence is exactly anonymous (you seemed to have revealed traceable personal info) and all it takes is for someone to inform on you to get an audit going.

Agree with Anita and co. It's not a matter of trusting your friend but protecting your best interests, especially when the IRS already have you on their radar. Your job/income situation sounds sketchy all round (are you officially on the payroll, did the company write you up on a W-2 etc.). Is your friend and the company's financial house in order? Doesn't come across that well. If either one is audited you'll be found out eventually.

There seems to be quite a few things which can be levied at you, like tax evasion, late filling and civil fraud penalties, so why risk potential grief when you'll be earning a bigger and stable income later. What's a couple of months of declared and taxed income?

 

[DJ_KiDDvIcIOUs]

I guess you guys are right, better safe then sorry. The only thing I'm gonna check on is if he is already paying the taxes on it since he will be getting the check and if that's the case I'll just consider it a gift. I should be 1099 rather quickly as I said anyway because I know he doesn't want to risk getting any of us in trouble

 

[Anita18]

I guess you guys are right, better safe then sorry. The only thing I'm gonna check on is if he is already paying the taxes on it since he will be getting the check and if that's the case I'll just consider it a gift. I should be 1099 rather quickly as I said anyway because I know he doesn't want to risk getting any of us in trouble

It doesn't matter if he pays taxes on his check or not. If it's HIS income, HE has to pay taxes on it.

When that money passes over to you, it's HIS expense (which he can deduct for) and YOUR income. That's when you get taxed on it.

What matters to you is if he declares the money he gives you as a business expense. If it's a gift, he should not. That's when being consistent about what you BOTH consider the money is extremely important. My uncle does not consider his gift money to us to be business expenses. That's why it's a gift and we don't pay taxes on it. But he got taxed on it when it was income for him. (We presume he gets it back deducted under "charity", but it's definitely not a business expense.)

It's not up to you to consider the money a gift. It's also up to the guy paying you. You both have to agree on what you're going to treat it as.

And you don't need to 1099 anything. Your employer requests your SSN by having you fill out a 99, then your employer files the 1099. So you have to request it be filed for your records, although as a freelancer you don't need it to send estimated taxes.

I'm confused by how much you really understand tax law. If you're going to decide on your own if it's a gift based on HIS income tax status on it when he earned it, you're way off the mark.

Until you understand what your liabilities really are, I suggest you do things by the book. That's probably how you ended up additionally owing Uncle Sam $4k....