<p>My daughter got a job at a pizza place about six months ago, in which they are paying her off the books. I did not know it would be this way and am not comfortable with this set-up, although I am told it is a very common practice for Mom and Pop establishments. My quandry is this, obviously, she can not put on a college application that she has worked up to 20 hours per week while retaining her class rank of 3 out of 578 students, because if she does, there will be no income tax filing. Should I have her quit. She loves the job and the people she works for, and teen jobs are very hard to come by. I need advice!!! By the way, the kicker is, they pay her less than minimum wage because she does not have the “tax burden”.</p>
<p>She can still report her income.</p>
<p>If she reports the income, she will get her employer in trouble since they would then have to pay taxes as well (including back taxes).
I guess I wouldn’t mind this for sporadic work like lawn mowing but a pizza place should be above board. What a sham about the taxes…students are exempt from taxes.
I would encourage her to look for another job…I know it’s tough but I don’t like the current set up at all. They’re breaking lots of rules here…</p>
<p>She would not necessarily get her employer in trouble. The tax forms have a place for income. It does not ask where the income originates. You can report whatever you want there. Though there is a very small chance that she can be audited, and her income get traced to the employer, that is not her problem. THe pizza place is operating illegally. Your daughter would be also, if she does not report her income from there.</p>
<p>My sons all had sporadic work on their resumes that did not show up on their tax forms but did for the college apps. Most kids do. There are things like a few dollars “tip” from a neighbor from helping out, babysitting, lawn work, dog walking that are often not reported for tax purposes. Especially if the amounts involved are under soc security limits and total income is below taxable levels.</p>
<p>There are a multitude of problems here, not the least of which is what happens if she gets hurt while working at a job where she is not an employee of record? </p>
<p>Don’t for an instant think that this isn’t completely to THEIR advantage, not your daughter. If they claim they pay her less because she isn’t taxed, guess what? They are paying her less ONLY to save THEM money.</p>
<p>First, they are paying a person to do a job LESS than they would have to pay if it was above board. They save on salary costs. By paying her under the table, they don’t have to pay the matching 6-7% in Social Security/Medicare taxes. They don’t have to pay their share of unemployment insurance. They save on THEIR tax costs.</p>
<p>A job like this? Should definitely be above board unless she’s family of the “Mom and Pop”.</p>
<p>Her work is assuming that she will cheat on her taxes just as they are cheating on theirs. (As toneranger points out, she probably won’t owe any income taxes on her income, but FICA would have to be deducted from her paycheck). </p>
<p>Where else are these people cutting corners? Workers comp? If your D was injured on the job, would she be out of luck?</p>
<p>Why not put it on the college application? She worked the hours at a job, she can put it down on an application. Lack of income tax filing doesn’t make a difference. Plus, kids who make less than a certain amount don’t need to file a form anyway.</p>
<p>Use the 6 months experience to find another job would be my advice. This set up is problematic.</p>
<p>I was unaware the IRS cross-referenced with college applications when doing audits.</p>
<p>I am an employer. She should quit. This is ridiculously illegal. If she gets hurt at work there is no worker’s comp. to cover her. They are not paying taxes on anything they are paying her. Technically she should report all her income and pay self employment tax. It is not okay for them to pay her less than minimum wage. If your local labor board knew about this they would be assessed all kinds of fines and penalties. Legally she could go to the labor board and file a complaint. They would have to pay her minimum wage on all the hours she has worked plus penalties.
I know you say she likes the people but this is grossly negligent on their part.</p>
<p>It’s wrong. She is not getting coverage for an on the job injury/workman;s comp. She is not getting SS or Medicare credit. They are cheating the government. They are not paying her minimum wage. </p>
<p>I have my own small business. I employ my D this summer. It is on the books. I would not do it any other way. </p>
<p>But, I understand why they are doing it. But it is wrong.</p>
<p>Your D CAN list the job and her hours on an application. I don’t see that to be a problem. I suspect if a college admissions office checked, the owners would vouch for her. A college admissions office is not the IRS. I don’t know what to tell you about FAFSA. I don’t know the implications of reporting income that is not reported to the IRS.</p>
<p>If your D does not need the cash that much, then she ought to ask that she go on the books or she feels she needs to quit. They might just put her on at that point.</p>
<p>Racinreaver, they do not as a matter of course. However, if anyone should draw a lucky card for a complete audit, they will check every little thing. The chances of that happening are very small, actually miniscule, given her probable income level; those usually targeted for that sort of audit usually have a lot more income involved, but it has happened to kids. </p>
<p>If for whatever reason this pizza place does get caught this for their practices, your daughter would be implicated because she knows darned well she is not paying social security, having her taxes withheld, etc. My advice is for her to report the income and pay what she owes for that, if anything.</p>
<p>I have both owned small businesses and worked for one.</p>
<p>My suggestion is that she find a way to let the owners know that her long term goal is to become a CPA, preferably working for the IRS. Or a lawyer, advocating for employees who have been cheated by their employers.</p>
<p>I think either will get the message across and your D will find herself with a W2 in short order!</p>
<p>FYI, the compliance issues for a small business go beyond tax (not that I’m making excuses for these folks to break the law). Your D (and every other employee) needs to produce evidence of her legal right to work in the US and the employer is on the hook for making sure they are not employing someone without a green card or who is not a US citizen. In my limited experience, employers who pay “off the books” generally do so because they have an employee who can’t produce documentation and the habit just sort of grows, extending down the food chain to the rest of the workers.</p>
<p>In food service businesses, there are often local and state laws governing who can use various types of equipment- so if they’ve got a bunch of 16 year old workers operating a grill or a slicing machine, that’s another source of liability. </p>
<p>You can use this as a teaching moment for your kid. She shouldn’t tolerate unsafe working conditions-- and employers who make a practice of evading their payroll taxes are probably cutting corners in a lot of other ways as well.</p>
<p>By the way I am in the tax business. Want to bet when the pizzeria sells a pie and charges sales tax the owner pockets that also.</p>
<p>You mean the business probably has another set of books? Maybe so…it wouldn’t surprise me.</p>
<p>Blossom, there are many businesses in my area that pay under the table. We are a Mecca of sorts for undocumented workers as a result. If you brought up any mention of wanting withholding or anything of the sort, your job would just disappear, and you can then decide whether you wanted to go through the trouble of reporting them. </p>
<p>My sons have worked as dishwashers, busboys, etc at a number of restaurants, especially the one who was audition and was in shows all summer, and there were a number of places that just paid cash. They were also the most flexible in hours which was critical for him. You worked your hours, got your cash, then called each day to see if they had more hours if you were available to work that day. He had a list of such places. Ain’t no way he was about to bust them, as he would be out of work if he did.</p>
<p>Ellen, some of those places keep no books.</p>
<p>^^:eek:</p>
<p>No books???</p>
<p>CPT- I know this is a catch 22- but how many underage kids were working the bar or pulling shifts past 11 pm? (not legal where I live). When’s the last time the owners tested the sprinkler system or had the fire extinguishers checked? </p>
<p>It is hard to be critical of hard-working entrepreneurs trying to earn a living and create jobs for others- but employment law is a little like the broken window strategy or nuisance crime policing method. People who are breaking the law in one area of their business (payroll taxes) are more likely to be breaking it in others (fire, hygiene, unblocked exits, undocumented workers, etc.)</p>
<p>
Glad you mentioned hygiene. I bet their health inspections aren’t too good, either!</p>
<p>Have her look for another job.</p>
<p>A former coworker has only one finger on one hand because she was told to use equipment she wasn’t old enough to use legally.</p>
<p>When I was in college, one place I worked paid some of its employees part cash, part merchandise. The ones whose overtime was being paid in merchandise didn’t need cheap clothing – they needed money. They were not in a position to complain. </p>
<p>So I called the Labor Board to report irregularities with my paycheck (which were very small), and that triggered an audit. Totally ticked off the store owner! I was not sorry to have done so.</p>
<p>I know exactly what you mean, Blossom. The underage part makes a big difference, in my opinion. I take a lot of responsibility for my younger kids that way. However, once they are over 18, I just let them know. Pragmatically, it would be a full time job just reporting these businesses around here. </p>
<p>Unfortunately, in this area, a lot of businesses do this. It’s just too easy to hire some and slip the cash to them for sporadic type jobs, and they do paperwork (I assume) only for the regular employees. The local favorite pizzeria got in trouble recently for not reporting enough taxes (no big surprise there; they take only cash). The guy is an old timer for here, didn’t blink an eye and just paid what he was assessed with the penalities or had the penalties negotiated. He still pays only cash to the workers there, and if you want to work there, that’s the deal. </p>
<p>I have not reported any of the tax evaders here; as I said there are enough to fill a notebook without pause. It is not of interest to the authorities as they have to know what is happening. Heck, we have a day laborer pick up site in our town, where such workers can congregate and wait for cars to come by and choose them for a day’s work. Doubt any of them are paying taxes. The reason the site has been set up is because our town lost a law suit in trying to keep the workers from congregating on the streets, loitering, urinating, trashing the area as they waited for work. This way they are all penned in one lot.</p>