@Pavan-Kanukollu wrote:
Apparently they pay in USDC. I am unsure what does it mean in tax terminology. Even if they dont give me a 1099 Form, Will it still be legal if I pay my due taxes by taking assistance from a Turbo Tax CPA during my filing and report the numbers right to the best of my knowledge? I am in dilemma to continue or not with this gig for her.
This applies to any small business/self-employed person who mainly works for cash:
The income tax system relies mostly on taxpayers being honest and providing truthful information on a voluntary basis. Some income is documented to the IRS so the IRS can cross-check the tax return against income records (like W-2s and 1099s). In the case of cash businesses, the IRS relies on people being voluntarily honest most of the time, with a few audits thrown in to help convince people to be honest.
If you are unlikely enough to be audited, the IRS can look at anything they want, including your bank records and spending habits. If you spend more than you report as income, or have unexplained bank deposits, they are allowed to guess that you have other income under the table, and they can asses tax on that. The burden of proof is on you to show your accurate income and business expense records. The more accurate and complete your business records are, the more likely they will be forgiven and the IRS will be willing to overlook small discrepancies. If your records are sloppy or just missing, then you will have a hard time persuading them to see things your way.
So the best defense of anyone who operates a cash business is to keep accurate records. If your wife is being paid daily, there is no reason she can't keep a simple spreadsheet or written account book noting the daily payments. Or, she may be able to retrieve a monthly statement from the bank or cryptocurrency exchange showing daily deposits and withdrawals. With proper record keeping, you can report and pay tax on the right amount of income, and you have a defense in case of audit. (With or without the help of a CPA.)
