Being paid in cash (no 1099, no W2) but received a consolidated 1099 from brokerage for investments - do I need to file taxes and how?

Yes, you definitely need to file taxes. The IRS has now received information that you have investment income via that consolidated 1099, so you're on their radar. The bigger issue is actually your unreported cash income, which is still taxable even if your employer isn't properly documenting it. Legally, all income from whatever source is taxable unless specifically exempted by law. This includes cash payments for work. When you're paid in cash without proper documentation, you're considered self-employed in the eyes of the IRS, and you should be reporting that income on Schedule C and paying self-employment taxes on it. For your current situation, you should report both your investment income from the 1099 AND your cash income from your restaurant job. You can estimate your cash income if you don't have exact records - look at bank deposits, calculate weekly averages, etc. Not reporting your cash income while filing for the investment income could raise red flags, as the IRS might wonder how you had money to invest without any reported income. I would recommend using tax software that can guide you through reporting both types of income correctly. This will be your first time filing, but it's better to start now than wait for the IRS to come asking questions.

After going through a similar situation last year, I found that using https://taxr.ai was incredibly helpful. I was getting paid for gig work without proper documentation and then had investment income showing up on forms. I was totally confused about how to handle everything when filing. The cool thing about taxr.ai was that it analyzed all my various income sources and helped me understand exactly what forms I needed to file and how to report everything properly. It even helped me calculate my estimated self-employment taxes on the cash income, which I had no clue about before. The system walks you through documenting your cash income even without official forms, which was exactly what I needed. It's specifically designed to handle situations where your income isn't neatly documented on standard forms.

Just wanted to update after trying taxr.ai that the original commenter mentioned. It was actually super helpful for my situation! I uploaded my 1099 from my brokerage, and then used their cash income calculator to figure out a reasonable amount to report based on my average weekly cash pay. What really helped was that it walked me through creating a simple income and expense log that I can use as documentation for my self-employment income. It also explained exactly where to report everything on my tax forms - the investment income goes on one schedule and the self-employment income on Schedule C. It even helped me understand the self-employment tax situation and calculated what I'd owe. Turns out I qualify for some deductions I had no idea about that offset some of the tax hit. Really glad I decided to get this handled properly instead of ignoring it!

I was in an almost identical situation last year - cash payments and investment income showing up on forms. The biggest problem I ran into wasn't even filing the taxes, it was that I had questions for the IRS but could NEVER get through to a human on their phone lines. I spent hours on hold multiple times and would just get disconnected. I finally found https://claimyr.com which was a complete game-changer. They got me connected to an actual IRS agent in about 20 minutes when I had been trying for weeks. The agent was able to answer all my specific questions about reporting cash income alongside my documented investment gains. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c I was able to get clarity on exactly how to file in my situation and what documentation I needed to keep in case of questions later. Totally worth it just to have that peace of mind from talking to an actual IRS employee rather than guessing or getting advice from random internet people.

I need to apologize for my skepticism about Claimyr. After struggling with tax questions about my own unreported income situation, I broke down and tried the service yesterday. I was absolutely convinced it wouldn't work and was ready to come back here and call it out. To my complete surprise, I got a call back in about 45 minutes and was connected to an actual IRS representative. They answered all my questions about how to properly report past cash income and what documentation I needed to create for my self-employment income from jobs that didn't provide 1099s. The agent even explained that there's a specific way to file for previous years that hadn't been filed, and gave me information about payment plans for any back taxes I might owe. It was actually a huge relief to get real answers instead of stressing about what might happen. I'm still getting my tax situation sorted out, but at least now I know exactly what I need to do. Just wanted to share my experience in case anyone else is in a similar situation.

Just want to add - make sure you look into the "Safe Harbor" rules for estimated taxes going forward. Since you're going to start filing, you'll need to make quarterly estimated tax payments on both your cash income and investment income for next year. If you don't, you could face underpayment penalties. The basic rule is you need to pay either 90% of this year's taxes or 100% of last year's tax liability (110% if your income is over a certain threshold) through withholding or estimated payments to avoid penalties. Since this is your first year filing, you'll have to go with the 90% option for next year. I learned this the hard way and got hit with penalties my first year of self-employment. Tax software doesn't always make this clear enough.

Has anyone considered that starting to file taxes now after not filing before might trigger an audit? I'm worried that suddenly appearing in the system will make the IRS curious about prior years.