Q: If I make under the table money….

Q: I make most of my money under the table as a childcare worker and am on medicaid and need to stay on it. I definitely make [under] the qualifying amount, but only 3000 of my income from the year is on a 1099, the rest is under the table. Most of the cash is from sitting for one family who isn’t interested in filing a W-2 nor can file a 1099. Can I trust an accountant to protect myself (file taxes semi legally and keep qualifying me for medicaid) and also protect my boss (the family I work for)? Or do I need to find another route to go about taxes?

A: I see two parts to this question: what do I do about taxes, and what do I do about accountants.

The second part is easy: like me, like most decent people, NO ONE is interested in putting other people in situations where they may need to have awkward conversations with the IRS. Accountants especially. The likelihood that you can find an accountant to fudge anything for you is very low.

As for taxes it’s a bit more complex, but in short, anything you put in the bank that is over a total of $600 for any one particular endeavour is money you should claim, since there is a chance if you were audited that the IRS would see regular deposits and ask where they came from.

How the F do I decide what’s a business endeavor and what’s money I just got for some other reason? Ok, for example:
  • If you sold your one TV for $750, got that money in paypal and then put it in your bank account, that’s not income to claim. You sold a thing, once, and didn’t buy it in the first place to profit off it*.
  • However, if you made a habit of selling TVs, and say over the course of a year sold 52 $250 TVs – even though each TV sold is under $600, the total is [way] more, so that’s a chunk of money you’d need to claim.


 Your accountant can help you figure it out; hopefully you have been both:
  1. saving for taxes against your income – at your income level 10% is probably fine though if you were making over 20K total a year you’ll want to start to save 15-20% – and…
  2. saving receipts that you can write off against the income, to lower the amount you are taxed on. anything from clothes for work, special trips, things you had to buy for your job [toys? books for the kids or on parenting?], your cell phone — to run your business! — can all be written off. Check out this info on freelancer finances 101 for more.


And finally, I can’t imagine it would harm the family if you claim it; frankly they *could* be claiming their payments to you and writing the cost of your service off on their taxes. And then, you would not be the first person I’ve talked to to be royally screwed at tax time by an employer who said they wouldn’t claim the money they paid you and then did.

That’s the short answer: claim anything that goes in the bank & save a % of the money after costs towards taxes & never wake up worried about the irs.


More tax questions? While I’ve filed complex taxes for sole proprietors for years, but I’m not an accountant. Find accountants listed on my resource page or sign up for Calm your TAXES ACK(ES), an in-person class given in Brooklyn on March 6 or April 3.

*note that sales on actual land property or stock market profits ARE taxed. but you didn’t ask about that.