Is she in trouble because her boss is paying her cash?

I'm not sure if she will be in trouble, but he certainly will be! He must do that along with work comp coverage (I think). What kind of business and how many employees and did she sign papers to that effct? If she filled out the normal tax forms for the job, than he is really in deep doo doo. She needs to find out about that, talk with the IRS would be my next move.

Your friend should call the IRS and have a chat about the differences between being an employee and being an independent contractor.

If she is an independent contractor, she reports all of the cash and pays all related taxes herself. Depending on the amounts involved, she may have had estimated tax payments to make. The payer is supposed to give her a 1099-Misc at the end of the year if he pays her more than $600, but even if he doesn't she can still file.

If she is really an employee, is the money really not being taken out? If so, she will have fun at tax time. She would need to file a form SS-8 to have the IRS make a determination as to whether she was an employee and then would attach a new form 8919 to properly calculate the employee's share of fica/mc. Even though the payer didn't withhold anything, all of the money was really from her anyway, so she'll pay it with her taxes.

Please suggest that she get in the habit of depositing the cash into her bank account each time she is paid. She needs to create a paper trail to show that she *did* get paid.

There is no law that says someone can't pay or be paid in cash - and taxes don't necessarily have to be taken out of each pay as long as they're paid by April 15th each year. If you don't pay into Social Security you won't get in trouble, but you won't be able to collect social security benefits either.

She should find a new job. She is shooting herself in the foot because she is not paying into her Social Security and Medicare accounts. Her boss is not paying his portion into her accounts either. Also, I bet he is not paying his fair share in unemployment (federal and State) taxes or Workmen's Compensation. What would your friend do if she got injured at work? So she turns him in, then is she going to stick around and work through the aftermath? I say work for a honest boss and get a new job.

If her employer is not deducting taxes as he is required to and your friend turns him in, the IRS will come down hard on him for that. She is, of course, required to pay the taxes herself if he doesn't withhold them properly, or she's in trouble too.

If he is failing to submit payroll taxes, he is in trouble. And she is not getting social security credit for her employment.

If she is not reporting the income, she is in trouble.

Well, then she is not paying taxes either. So yes, she would get in trouoble - and yes, he would too. Tax evasion is not pretty, but maybe only a minor penalty if she informs the IRS first , rather than them finding out on their own.

Yes, she will......even if her boss will get on trouble, the TAX man will come out to get her with stiff fines..

Uncle Sam always wins