15 years paid "under the table" - tax newbie needs help with rights & obligations

This is definitely not right, and you need to address this situation for several reasons. Let me break it down: First, if you're working and being paid, you ARE required to report that income to the IRS regardless of how much you make. There's no "too little to file" exception for earned income - that's a myth. Your relative is misinforming you. Second, by claiming you as a dependent while you're working for them, they're getting tax benefits they likely aren't entitled to. For someone to claim you as a dependent, you generally need to live with them, they need to provide more than half of your support, and you must meet certain income requirements. Third, working "under the table" means you're not building Social Security credits. This will seriously impact your retirement benefits in the future. You're also missing out on unemployment protection and workers' comp if you get hurt. What you describe is potentially tax fraud on your relative's part. They're avoiding paying employer taxes (Social Security, Medicare, unemployment insurance) and possibly improperly claiming a dependent deduction. For your recourse: start by documenting everything - hours worked, cash payments received, etc. Then you should file your own tax returns for the current year at minimum. The IRS has a way to report income even without W-2s using Form 4852.

After reading your situation, I want to share my experience with a similar tax mess. I worked "under the table" for years at my uncle's shop, and when I finally tried to sort out my taxes, I was overwhelmed by the backfiling and potential penalties. I found this service called taxr.ai (https://taxr.ai) that helped me navigate my complicated situation. You can upload documentation of your work (even if it's just your own records of hours and payments), and they have tax pros who specialize in addressing unreported income and "under the table" employment. They helped me calculate what I should have been paying all those years and created a plan to get compliant without destroying my finances. The best part was they helped me claim tax credits I never knew I qualified for, which offset some of what I owed. They also created documentation I could use when talking to my relative about the situation.

I wanted to follow up about taxr.ai since I ended up using their service after asking about it here. I was nervous about my 4 years of unreported income, but they made the process WAY less intimidating than I expected. They walked me through creating documentation of my cash payments, helped me file for the recent tax years, and even found some credits I qualified for that reduced what I owed. The tax specialist explained exactly what I needed to do step by step, including how to handle the conversation with my employer. I've now got proper documentation, I'm square with the IRS (on a reasonable payment plan for what I did owe), and I actually got a small refund for the most recent year after applying the credits they found. Seriously relieved to have this weight off my shoulders.

If you need to actually talk to the IRS about your situation (which you probably should), good luck getting through to them! I spent WEEKS trying to reach someone about my "under the table" employment situation. Kept getting disconnected or waiting for hours. I finally used Claimyr (https://claimyr.com) to get through to an actual IRS agent. They have this system that navigates the IRS phone tree and waits on hold for you, then calls you when an actual human picks up. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with was actually really helpful and walked me through my options for reporting past income and getting into compliance without maximal penalties. They even helped me understand which forms I needed and the best approach for my specific situation.

I need to eat my words about Claimyr. After my skeptical comment, I was desperate enough to try it when I couldn't get through to the IRS for 3 weeks straight about my own tax situation. It actually worked exactly as described - I got a call back when they had an IRS agent on the line. The agent was surprisingly helpful about my situation (some unreported income plus confusion about status as a dependent). They explained the Voluntary Disclosure program which can help minimize penalties when you come forward about unreported income before they come after you. They also confirmed what others said here - being claimed as a dependent incorrectly by someone else is their tax issue, not yours. I'm now working with a tax professional to file my back returns properly. The relief of finally dealing with this after years of anxiety is worth it.

I've been in a similar situation (family business, cash payments), and here's what you need to know: your relative is saving a TON of money by keeping you off the books. They're avoiding: - Employer portion of Social Security & Medicare taxes (7.65% of your wages) - Federal unemployment taxes - State unemployment insurance - Workers' compensation insurance - Possibly avoiding income tax on the business income they're using to pay you Plus by claiming you as a dependent, they're getting an additional tax deduction they're not entitled to. Depending on your state, there could be additional violations. You should definitely file your own taxes and start documenting everything. If you're worried about family tension, start by having a conversation where you explain you're concerned about YOUR future (retirement, disability protection, etc.) rather than accusing them directly.

Just to give you a heads up - once you start filing taxes correctly, DO NOT file a return claiming yourself if someone else has already claimed you as a dependent. This creates a red flag and both returns will likely be reviewed. Instead, file your return on paper (not electronically) and include a note explaining that someone has incorrectly claimed you. The IRS will investigate and determine who is entitled to claim you. If you haven't been claimed yet for the current tax year, file electronically ASAP and claim yourself. This will block them from e-filing with you as a dependent (their return would be rejected).

I want to add some perspective on the Social Security aspect since it's really important and often overlooked. At $16.75/hour for 24 hours per week, you're earning about $20,904 annually. Over 15 years, that's over $313,000 in wages that haven't been reported to Social Security. To qualify for Social Security retirement benefits, you need 40 "quarters of coverage" (basically 10 years of reported earnings). Right now, you have ZERO quarters despite working for 15 years. This means you're not building toward any retirement benefits at all. Even worse, Social Security benefits are calculated based on your highest 35 years of earnings. Missing these 15 years means those will count as $0 years in your calculation, significantly reducing your eventual monthly benefits. The good news is you can still fix this by filing back tax returns. The IRS generally allows you to file returns for previous years to claim refunds (though there are time limits), and this will also report your earnings to Social Security. You're still young enough that getting into the system now and working legitimately for the next 20-30 years can still result in decent Social Security benefits. But every year you wait makes it harder to build up those credits. This isn't just about current taxes - this is about your ability to retire someday. Your relative may be "old school" but they're literally jeopardizing your future financial security.