How do I pay taxes when being paid under the table in cash?

You're actually being really responsible by setting aside money for taxes - most people in your situation don't think ahead like that. What you need to do is file as self-employed using Schedule C (Profit or Loss from Business) along with your regular 1040. Since you don't have documentation, you'll need to carefully reconstruct your income. Go through your bank deposits, keep a record of cash payments received, and estimate your total income as accurately as possible. Track any expenses related to your work too (tools, transportation, etc.) as these may be deductible. You'll also need to pay self-employment tax (Social Security and Medicare) using Schedule SE. The self-employment tax rate is about 15.3%, and then you'll owe regular income tax on top of that, which is why setting aside 30% was smart.

I was in almost the exact same situation last year with my construction gig! Took me forever to figure everything out until I found taxr.ai (https://taxr.ai) which seriously saved me. Their AI analyzed my situation and walked me through how to file as self-employed with cash income. It asked about my income sources, helped me identify possible deductions, and generated all the right forms I needed. The best part was it showed me how to properly document my cash income even without traditional paperwork, which was my biggest worry. They have specific guidance for people paid in cash with no formal documentation.

Just wanted to follow up - I took the plunge and tried taxr.ai after posting here. So glad I did! It walked me through the whole process of documenting my cash income and filing as self-employed. The system helped me identify several deductions I had no idea about (mileage to job sites, some of my tools, even part of my phone bill for work calls). I was nervous about using an online service for something so complicated, but it actually explained everything in plain English and the documentation guidance gave me peace of mind. I'm now keeping much better records for next year's taxes. Definitely worth checking out if you're in a similar situation with cash income.

If you're struggling to get answers about your tax situation, especially with unreported income, you might want to speak directly with the IRS. But we all know how impossible it is to get through to them - I once spent 3 hours on hold before giving up. That's when I discovered Claimyr (https://claimyr.com). They have this service that gets you to the front of the IRS phone queue so you actually talk to a real person who can answer your specific questions. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c I was skeptical, but it actually worked. I got through to an IRS agent in about 10 minutes who walked me through exactly what forms I needed and how to document my situation properly. Saved me a ton of stress and guesswork.

I can't believe I'm saying this, but I tried that Claimyr service and it actually worked. After posting my skeptical comment, I was still desperate for answers about my side gig tax situation, so I figured what the hell, I'll try it. Within 15 minutes I was talking to an actual IRS representative who walked me through exactly how to report my unreported income without raising red flags. They even explained which deductions I was eligible for as someone who's essentially self-employed. The agent told me that as long as I'm making a good faith effort to report my income correctly, that's what matters most to them. Honestly shocked that it worked so well. Saved me days of stress and probably a bunch of money in incorrect filings.

You might want to consider filing Form SS-8 to determine your proper worker classification. If you're misclassified as an independent contractor when you should be an employee, your employer should be paying half your Social Security and Medicare taxes. Right now you're probably paying the full 15.3% self-employment tax which isn't fair if you're truly an employee. But fair warning: filing this form will definitely put your employer on the IRS radar, so it could create workplace tension if they figure out it was you who filed.

don't overthink this. just report your income on schedule C as "miscellaneous labor" or something generic. put down what you made, claim some basic expenses like tools and gas, and pay what you owe. i've done this for years with side jobs and never had a problem. the IRS mostly cares that you're paying taxes, not exactly how you earned it. unless you're making huge money they're not gonna bother auditing you.

I went through this exact situation a few years ago when I was doing handyman work for cash. Here's what I learned the hard way - you definitely want to file correctly from the start because the IRS has gotten much better at catching unreported income through data matching and bank deposit analysis. The key is treating yourself as a sole proprietor and filing Schedule C along with your 1040. You'll report your total cash income under "receipts" and can deduct legitimate business expenses like tools, vehicle expenses for work travel, and even a portion of your phone bill if you use it for work coordination. One thing that really helped me was opening a separate bank account just for my work income. Even though you're getting paid in cash, depositing it into a dedicated account creates a paper trail that shows you're being transparent about your earnings. The IRS likes to see that kind of organization. Also, definitely look into making quarterly estimated tax payments if you're going to keep doing this work. Waiting until the end of the year can result in underpayment penalties. Since you're already setting aside 30%, you're in a great position to make those quarterly payments. The self-employment tax is the real kicker - it's 15.3% on top of your regular income tax. But remember, you can deduct half of that self-employment tax when calculating your adjusted gross income, which helps a bit. Don't let anyone talk you into not reporting this income properly. It's not worth the risk, and honestly, doing it right from the start gives you a legitimate work history that could help with future employment or even getting a loan.

As someone who's dealt with similar cash payment situations, I want to emphasize how important it is to start keeping meticulous records right now, even if your past record-keeping wasn't perfect. Create a simple log with dates, amounts received, and brief descriptions of work performed. Take photos of cash payments when possible, and definitely follow the advice about opening a separate bank account for work deposits. One thing I haven't seen mentioned yet is that you should also track your work-related mileage. If you're driving your own vehicle to different landscaping jobs, those miles are deductible at the current IRS rate (65.5 cents per mile for 2023). This can add up to significant deductions over a year, especially if you're traveling between multiple job sites. Also, don't forget about other potential deductions like work clothing that can't be worn as everyday clothes, safety equipment, small tools, and even subscriptions to trade publications if you have any. Every legitimate business expense helps reduce your taxable income. The fact that you're proactively asking these questions and setting money aside shows you're handling this responsibly. Many people in cash-pay situations just ignore the tax implications entirely, which creates much bigger problems down the road.