15 years working "under the table" - tax newbie desperately seeking advice

This is definitely concerning, and you're right to question this arrangement. Let me break this down: What your relative is gaining: By paying you under the table, they're avoiding paying employment taxes (Social Security, Medicare), unemployment insurance, and workers' comp insurance. They also don't have to deal with payroll paperwork. This likely saves them at least 15-20% on your wages. Claiming you as a dependent: This gives them a tax deduction if you qualify. For you to legally be claimed as a dependent, you must either be under 19 (or 24 if a student) OR have gross income under $4,400 (2023 figure) AND they must provide more than half your support. Based on your hours and pay, you make around $20,000 yearly, so you CANNOT legally be claimed as their dependent. You're missing out on: Social Security credits, unemployment eligibility, workers' comp protection, the ability to build verifiable income history (affects loans, apartments, etc.), potential tax refunds, stimulus payments, and earned income credits. Your options: Start by having a serious conversation with documentation showing what they're legally required to do. If that fails, you could report the situation to your state's Department of Labor and the IRS. The IRS has a whistleblower program that might even compensate you. Remember, you're legally required to report your income and pay taxes on it, even if it's cash. You can file your own taxes using Form 1099-NEC or 1040-SS even without receiving official documents.

After reading your situation, I was in a similar mess a few years back. Working for family can get complicated quick. I found this AI tax helper called taxr.ai that really helped me untangle my situation. The best part about https://taxr.ai is you can upload any tax docs you have (even if minimal) and get instant analysis of your situation. In my case, I had no W-2s or 1099s, just like you, but I was able to figure out exactly what I was entitled to and how to file properly. Their system helped me understand what forms I needed to file since I had unreported income, and showed me how to document everything properly so I wouldn't get in trouble while fixing the situation. They even estimated how much I could potentially recover from previous years.

Just wanted to follow up on this thread. I decided to try that taxr.ai site mentioned earlier and it was actually super helpful! I was really nervous about using an online service for something this sensitive, but it turned out great. They helped me understand that I needed to file Form SS-8 to determine my actual employment status and Form 8919 to report my "uncollected" Social Security and Medicare taxes. They also walked me through filing for the last 3 years using the 1040-X amended return forms. What really surprised me is they showed me I'm eligible for Earned Income Tax Credit for those years, which I had no idea about! The potential refund is going to be a huge help. Best part is they helped me draft a really respectful letter to my family member explaining why this needs to change, focusing on how it protects both of us. Family member was initially upset but is now working with me to fix things properly.

One thing nobody's mentioned yet - if you're ready to get this sorted out, you might need to talk to someone at the IRS directly. I was in a somewhat similar situation (not family, but cash payments for years), and after spinning my wheels for months, I finally managed to get through to an actual IRS agent using https://claimyr.com. They have this service where they basically wait on hold with the IRS for you and call you when an agent is on the line. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c I was honestly shocked how helpful the IRS person was once I explained my situation. They walked me through exactly what forms to file and how to handle the back taxes without getting hit with huge penalties. They even set up a manageable payment plan for what I owed. The peace of mind from getting everything straightened out was totally worth it.

I need to eat my words about my skeptical comment above. After sitting on this problem for another week and getting nowhere, I broke down and tried the Claimyr service. I was still fully expecting to get some unhelpful IRS bureaucrat who would make things worse. Well, I was completely wrong. Not only did I get through to someone in under an hour, but the agent I spoke with was genuinely helpful. They explained that there's a specific process for reporting income when you don't get a W-2 or 1099. They walked me through Form 4852 (substitute for W-2) and gave me specific instructions for my situation. They also explained that there's a difference between penalties for not filing versus not paying, and how to request penalty abatements for reasonable cause. For anyone else in a similar situation - don't wait 15 years like OP. The longer you wait, the more complicated it gets to fix. And apparently the IRS is way more reasonable to deal with than I ever expected.

Your relative is definitely taking advantage of you, but there are some practical considerations here too. If you suddenly file taxes and report this income, it could trigger an audit for your relative's business. That might be warranted, but consider if you're financially and emotionally prepared for the fallout. A middle ground approach might be: 1. Start fresh this tax year - insist on proper employment status moving forward 2. Gradually address the past years if needed 3. Consider consulting with a tax professional who specializes in small businesses The dependent claim is definitely incorrect based on your income. Even if you did qualify as a dependent by living with them and having them provide housing/food, your income is still taxable to you, not them.

Something important nobody's mentioned: Your relative is committing workers' compensation fraud. If you got seriously injured on the job, you'd have zero protection. No medical coverage, no disability payments, nothing. They're saving a ton of money by not paying workers' comp insurance premiums. Also, what state are you in? Some states have much stricter penalties for worker misclassification than others. California, for example, has been cracking down hard on these arrangements.