This gets involved with the cash, so one part at a time. They are looking to validate your income and taxes paid.
Paid in cash:
- If you were paid in cash, governments believe you are a contractor and file as self-employed.
- As an employee, you would have a w2. A employer is required to hold back part of the pay for Medicare and Social Security tax, they match it and send in the money quarterly.
You may think you are an employee getting paid in cash but without the w2, you will have to either report that you are not being given a w2 to the IRS and NY or you will have to claim self employed and pay Medicare and Social Security tax that your boss does not want to pay for you.
Steps to take:
First, you need to determine if you are an employee or a contractor. See Independent contractor vs employee
Second, determine how much you actually made. You may have receipts or a log book, bank account of deposits,, anything to help you reconstruct the income. Use your tax return as a guide for searching for income amounts.
Third, expect a change in income / taxes/ credits. Start saving now. NY does have a payment plan available.
Personal note:
If you are being paid in cash and not an employee, and not reporting it as self employed, you are not receiving credit towards Social Security. If you become disabled or ill, you may not have the credits needed to receive benefits. You really want to report income and pay the self employment taxes or have a boss that pays the required taxes.
Best wishes!
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