How do I go about filing Taxes if I am paid by cash?

I am going to start getting paid for housecleaning and childcare fo a woman and her children and she will be paying me by either cash or check. I want to be able to get financial aid so I would need to have an income tax return.





How can I file for taxes?


Is it a one time thing around tax time or do I need to pay taxes everytime I get paid?


I will not get paid much, and I have a child, would I have to pay a lot of taxes?

How do I go about filing Taxes if I am paid by cash?
Great question and congratulations on becoming "self employed"! In essence you will be a "business owner". What you will need to do is to track all of the income you receive. Purchase an inexpensive journal to do this and if you have a bank account, I would deposit all the cash and checks into this account for tracking purposes. You will also need to know if the woman that you will be working for is planning to deduct the amount she pays you for child care on her taxes. If she will, she most likely will need to issue you what is called a "1099" which is the form the IRS requires a person to provide at the end of the year to people that they pay on an independent contract basis.





The long and the short of it is this. At the end of the year, spend the $100-$200 bucks at your favorite "discount" tax preparer business. H%26amp;R Block, Jackson Hewitt or Liberty Tax Service just to name a few. The money spent will be well worth it to ensure that your tax return is prepared properly, that the return will get you the desired result for financial aid and that you won't have to worry about "issues with the IRS" later on.





If your "employer" is not planning on deducting this child care expense on her tax return you need to inform her that you will be reporting the income and why (financial aid reasons). You most likely will have to report where the income came from on your return and you don't want to get her into trouble down the road either.





Hope this helps!





Oh, also keep track of your mileage if you drive to her house as this may be deductible as well. Any expenses remotely related to your new work may be partially or fully deductible as business expenses as well.





Wes Engbrecht (Self Employed for 20 years! :-) )


Norsew Investments, LLC


Rochester, MN


The Six Figure Income Professor


http://www.replacemypay.com
Reply:If that is the way your going, take 15% of everything you make and put it in an account and at the end of the year you will have the money for your taxes, but the way it sounds you will not owe except for social security, Hope for the FairTax then you get money back every month.
Reply:The most important thing is to get receipts for everything, and KEEP YOUR RECEIPTS! People who are paid in cash tend to raise curiosity from the IRS. I don't know the rules for your state, but usually in a situation like yours, you are considered an independent contractor, like a small business owner, and virtually all your expenses are tax deductible. File a tax return like anyone else, and it would probably be wise to have your return done by a professional. You might also want to have one consultation with an accountant, just to make sure you're complying with tax laws.
Reply:It sounds like you should be considered a household employee (think Nanny tax.) If so, you are not self-employed if you are paid more than $1,500 over the course of a year the employer must withhold social security tax from your wages and match it then give you a W-2 at the end of the year. The employer reports your wages and the tax on Form 1040, Schedule H (as in "Household.")





You are unlikely to owe any income tax and will likely be entitled to refundable earned income credit and additional child tax credit.