Whether you are an employee or a contractor depends on the circumstances of your relationship. Your employer can’t legally pay you as a contractor if the circumstances of your relationship make you an employee. Read here for more.
https://www.irs.gov/newsroom/worker-classification-101-employee-or-independent-contractor
https://www.irs.gov/taxtopics/tc762
If you believe that your relationship is that of an independent contractor, then you will file a schedule C as a self-employed person. You report your gross income and you can deduct your expenses and pay income tax and self employment tax on the net profit. You will generally be required to pay quarterly estimated income taxes, and if you don’t make the quarterly payments, you may owe a penalty even if you pay in full when you file your tax return.
If you believe your relationship is that of an employee, then your employer is breaking the law. You will have to file a form SS8 as part of your tax return. This is a request to have the IRS investigate your situation, and determine if you are an employee or a contractor. If the IRS determines that you are an employee, they can assess substantial penalties to your employer. You may also want to contact your state labor board, because employers have certain responsibilities to pay taxes, unemployment insurance, and other things, and if your employer is paying you under the table, they are probably breaking several other state laws and not paying other state taxes that your state labor board will likely be interested in.
