We had some issue with that ourselves when we hired our first nanny. We asked the tax guy if we could pay her as a contractor, and he was like, “Yeah, no problem! Most people do it that way unless she’s a live-in nanny.” Well, that was kind of misleading. The fact of not getting caught doesn’t make it legal, as he followed that up with a, “As long as you never plan to run for office or anything.” And I’m still not entirely sure about the legality. But we have the current nanny on payroll. We may be the only freaking family in the county that does it that way, but I don’t love the idea of getting hit with a bunch of tax penalties some day out of the blue.
It’s a tax increase, sure. But why do you deem it a “ripoff” to tax services at the same rate as goods?
I guess for a taxpayer who wants to be honest, questions directed to a tax consultant shouldn’t start with “can I…”; they should start with “is it legal to…”.
What exactly are you angry about? Lots of people don’t get the job they interviewed for, that’s why job interviews are stressful.
Modnote: It would help communication if you used k and not m as that is much more standard or maybe spell it out for clarity. Instead of 50m or 50k, 50,000.
That said, @Mighty_Mouse please no need for a nitpicky response to it.
This is just a guidance, not a warning. Nothing on your permanent record.
Up here in the Great White North we had something called the Canada Emergency Recovery Benefit to assist with job losses during Covid. A lot of people who were working under the table discovered they weren’t eligible or at a greatly reduced rate due to underreporting on their 2019 taxes which were used as the baseline for income loss.
The law of unintended consequences…
Social Security does not withhold any more money for income above $142,800, but Medicare does not have a similar limit; if you earn money, it will be taxed at 1.45% to infinity.
(Back in my working days, I would almost always have a co-worker comment in December that they had extra money on their paycheck. They didn’t know this was why.)
ZOMG before I sold my old house, I needed a new roof, and one of the companies I called for an estimate expressed more interest in screwing over the insurance company (they were willing to pay due to hail damage) than in actually fixing my roof. It didn’t help that one of them lit up a cigar in my living room without asking me first.
It also eliminates the need for billing, or collections if they don’t pay further for whatever reason.
My dentist offers a 10% “cash” discount; I wrote a check last time I was there, but that did count, because I don’t have dental “insurance”; most of those plans are really just discount cards anyway.
I did.
This place is supposed to be about fighting ignorance; try it sometime; you might learn something new. m is much more common in the financial world than k is.
I guess I’m still miffed that the GST was sold to the public with a considerable element of dishonesty. It was billed as a “replacement” for the hidden manufacturers’ sales tax, and the fact that it was a lower rate would actually make many items cheaper; the example frequently used was new cars, which sounded great for such a big-ticket item. I was still fairly young at the time and didn’t fully grasp the implications until it became law, and it turned out that the GST applied to virtually everything, including many things that had never been taxed before, like services and, shockingly, even new houses! The “harmonization” strikes me as similarly dishonest, allegedly a “convenient” bundling of GST and PST into a single number, but in actual fact extending the PST across the board to a huge plethora of things not previously taxed.
Doesn’t the IRS pay a reward to people who inform?
Conversely, HST made my life substantially easier.
Under PST in Ontario, writing custom software was not taxed whereas “configuring” commercial off the shelf software (COTS) as well as COTS itself was taxed. So if we sold $25K worth of software and $50K of configuration, there was an additional $6K in tax. We were audited for PST and it was very painful, but we came out of it clean.
With the shift to HST, the distinction went away because everything had HST but businesses received an Input Tax Credit so they didn’t care about the tax at all. If you were selling services to individuals, HST worked against you for sure.
My guy worked years and years off the books. When he became disabled and tried to collect SSDI, he had insufficient quarters of work and was SOL.
This. When I waited tables, we had to report our tips at the end of each shift when clocking out, and anyone who reported tip amounts less than 10% of their sales would be called in to the manager’s office. Most American restaurant customers tip between 15-20%, though we had to give a portion of our tips to the bussers, so 10% was a low-end-of-reasonable “take-home” estimate. But some servers, and even some managers, got it into their heads that this was the actual IRS rule–that you didn’t need to report what you actually earned, you just needed to report 10%.
In Australia, politicians and even the tax office are themselves in on this to a greater or lesser degree.
The tax office make it known they will not investigate claims below a certain level. They announce that deductions to a certain level can be made without keeping receipts (wink, wink). Presumably they figure that almost everyone is going to cheat on certain deductions anyway, so they may as well make it semi-official, and thereby discourage people from cheating to any greater level.
Of course this punishes honest people for being honest.
Politicians like to announce this sort of deduction because they can tailor it to certain demographics whose votes they want to buy, without officially doing so. So for example the vehicle deduction I mentioned above is basically a tax cut for the self-employed, but disguised as merely a new tax administration rule. There’d be rioting in the streets if politicians announced it was giving a $xx thousand tax cut but only to the self employed. But by saying merely “you can now deduct the entire cost of a certain vehicle type in the first year” [if you use it entirely for work, wink wink], they can get it beneath the radar.
You have to tolerate them and you have to admit they exist. You cannot make any social contracts assuming that everyone will follow.
You can kill them if you in that mindset, but usually incarsanating (sp?) them is more costly than the fact that they are not paying their dues. There might be other things than money on the line and thus we get the idea of putting draftdodgers into jail. There are alternatives but even when you offer some civil service as an alternative there are still those who say FY and rather go to jail.
In Finland you cannot charge person for taxevasion if he had earned the money illegally. Illegaly gained money is not taxable in Finland because it is always totally forfeited to the state. It would be double jeopardy that first you are convicted of your illegal activity and then taxevasion on the earnings you just lost to the state.
If you cannot prove that the money was earned illegaly then you get the guy with taxevasion but then he gets to keep the part that is left after taxes. If the sum of the evasion is big enough there is mandatory jailtime included.
When I was working as a mailcarier in Helsinki the 80’s I always deducted pair of working shoes every year and I never needed to give them a receipt. It was given that a foot deliver mailman wears out one pair of summer boots and one pair of winter boots in two years. So pair of shoes deducted every year. Imagine the amout of recepts that would have cluttered the taxoffices.
When I was unemployed and studied to a new field I went to job interview from Helsinki to the Porvoo oilharbor. I gave the busticket to the unemplyment office as a proof for compensation and they did not accept it. They paid me the trip based on the idea that it’s 100km from Helsinki to Porvoo. It is not it’s way less and the Sjöldvik oilharbor is not even at the distance to Porvoo center but it is over 50km from Helsinki center. But still there was more savings not to type in all the right distances that job seekeres went so the granulatised it to 50, 100, 200km etc.
Car dealerships are required to file Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business. Banks report deposits over $10k too. It doesn’t necessarily trigger anything.
Last I saw it with a car, the dealership was more annoyed about having to count it all.