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bschramek
New Member

My employer pays me in cash, but I do receive a pay stub. Is this legal? When it is time to file my taxes could I potentially be screwed? Please anwser

I work at a local business and would like to know if I'm being paid appropriately. 

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My employer pays me in cash, but I do receive a pay stub. Is this legal? When it is time to file my taxes could I potentially be screwed? Please anwser

It's hard to know without more details, and even though you won't really know until next year.

Paying in cash is fine, or check, or preloaded debit card, or direct deposit.  By itself, that is not a problem.  If the cash does not match the other documents (pay stub, W-2 at the end of the year) that would be a problem.

Before starting work, your employer is supposed to get you to fill out an I-9 form that proves you are legally allowed to work in the US, and to collect a W-4 form to choose your tax withholding.  Not doing those things could be a sign that this employer is not doing things correctly.

Your employer is required to withhold federal income tax, state income tax, social security and medicare tax.  The amounts of the first two depend on how you filled out your W-4. Social security is 6.2% of gross, and medicare is 1.45% of gross.  All these taxes that the employer withholds are sent to the IRS either monthly or quarterly, and credited to your tax account (an employee normally never see the paperwork for this).

At the end of the year the employer must issue a W-2 form by January 31, 2017.  The W-2 should list your gross wages for the year and the total of federal, state, social security and medicare withholding.  The numbers will usually match or be close to your last pay stub, but may be different  due to certain employee benefits you might receive.

You can ask other employees if they had problems with their W-2s in past years.  If not, it's probably fine.  If you have concerns, keep good records of everything (amount of cash actually received, pay stubs, any discrepancies, untaxed cash, etc.) so you can take the appropriate action next tax season if needed.

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4 Replies

My employer pays me in cash, but I do receive a pay stub. Is this legal? When it is time to file my taxes could I potentially be screwed? Please anwser

Did you fill out a W-4 withholding form, and give it to your employer?  Which state do you work in?

My employer pays me in cash, but I do receive a pay stub. Is this legal? When it is time to file my taxes could I potentially be screwed? Please anwser

It's hard to know without more details, and even though you won't really know until next year.

Paying in cash is fine, or check, or preloaded debit card, or direct deposit.  By itself, that is not a problem.  If the cash does not match the other documents (pay stub, W-2 at the end of the year) that would be a problem.

Before starting work, your employer is supposed to get you to fill out an I-9 form that proves you are legally allowed to work in the US, and to collect a W-4 form to choose your tax withholding.  Not doing those things could be a sign that this employer is not doing things correctly.

Your employer is required to withhold federal income tax, state income tax, social security and medicare tax.  The amounts of the first two depend on how you filled out your W-4. Social security is 6.2% of gross, and medicare is 1.45% of gross.  All these taxes that the employer withholds are sent to the IRS either monthly or quarterly, and credited to your tax account (an employee normally never see the paperwork for this).

At the end of the year the employer must issue a W-2 form by January 31, 2017.  The W-2 should list your gross wages for the year and the total of federal, state, social security and medicare withholding.  The numbers will usually match or be close to your last pay stub, but may be different  due to certain employee benefits you might receive.

You can ask other employees if they had problems with their W-2s in past years.  If not, it's probably fine.  If you have concerns, keep good records of everything (amount of cash actually received, pay stubs, any discrepancies, untaxed cash, etc.) so you can take the appropriate action next tax season if needed.

Hal_Al
Level 15

My employer pays me in cash, but I do receive a pay stub. Is this legal? When it is time to file my taxes could I potentially be screwed? Please anwser

If your pay stub shows  federal & state income tax, social security and medicare withholding, you can be pretty sure you will be getting a W-2.
TomD8
Level 15

My employer pays me in cash, but I do receive a pay stub. Is this legal? When it is time to file my taxes could I potentially be screwed? Please anwser

If your pay stub doesn't show any withheld taxes, or if you're not sure, I would strongly suggest that you ask your employer if taxes are being withheld from your pay.

If your employer is NOT withholding taxes, that would mean that he's treating you as an independent contractor and not an employee.  If that's the case, you'll need to be paying estimated taxes.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.
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