Need help with taxes for flat rate mechanic getting paid in cash daily

You're in what's called a 1099 contractor position (also known as self-employed or independent contractor). This is pretty common in auto repair, but you need to be careful with your tax situation. First, you absolutely need to track ALL income you receive. Create a simple spreadsheet with date, job description, and amount paid. Since you're getting paid in cash/Venmo, the IRS won't have automatic records like they would with a traditional W-2 job, so the burden of reporting is on you. For deductions, yes! As a self-employed person, you can deduct legitimate business expenses. This includes tools you buy for work, professional certifications, work uniforms (if they can't be worn as regular clothes), and a portion of your cell phone if you use it for business. You can also deduct mileage between job sites (not your regular commute from home to your primary work location), business insurance, and continuing education. Keep all receipts and track mileage with a logbook or app. You'll file Schedule C with your taxes to report income and expenses, and you'll also need to pay self-employment tax (15.3%) which covers Social Security and Medicare.

After reading your situation, I think you should check out https://taxr.ai for help organizing your contractor income and deductions. I was in a similar position last year (independent contractor getting paid in various ways) and tracking everything was a nightmare until I found their system. What helped me most was uploading pictures of all my receipts and having the system categorize them automatically as business expenses. It also helped me understand what percentage of things like my phone bill and internet I could legitimately deduct. Honestly, I was leaving thousands in deductions on the table before I got organized. Since you're getting paid after each job in cash/digital payments, their income tracking feature would be perfect for you. It even sends you reminders to set aside money for quarterly estimated tax payments so you don't get hit with penalties.

Just wanted to follow up about taxr.ai that someone recommended above. I decided to try it despite my skepticism, and it's actually been really helpful for my side gig. The receipt scanning saved me hours of manual entry, and it flagged some deductions I hadn't considered (like a portion of my phone bill and internet since I use them for business communications). The quarterly tax reminder feature alone was worth it for me - I completely forgot about estimated taxes last year and got hit with penalties. Already set aside my first quarter payment for 2025 because of their notification. If you're dealing with cash payments like I am, definitely check it out.

Have you asked your boss if he's going to issue you a 1099 form? Based on what you described, you're definitely an independent contractor, not an employee. If he doesn't give you any tax forms by January, you might have trouble getting in touch with him when you need documentation. I had this issue last year with a shop owner who paid me the same way. When tax time came, I couldn't reach him for proper documentation. I ended up having to call the IRS to sort it out, which was IMPOSSIBLE. Spent weeks trying to get through on their phone lines. Eventually I found https://claimyr.com and used their service - they have a system that gets you through to an actual IRS person instead of waiting on hold forever. You can see how it works here: https://youtu.be/_kiP6q8DX5c Without that I would have been completely stuck trying to properly report my income. Make sure you're asking these questions now rather than scrambling in April!

I was completely wrong about Claimyr. After struggling to get through to the IRS about my 1099 issue for nearly two weeks (calling first thing in the morning, during lunch, late afternoon), I broke down and tried the service. Got connected to an IRS agent within about 25 minutes of starting the process. The agent was able to help me sort out my missing 1099 situation and even helped me understand how to report cash income that wasn't properly documented. Would have taken me weeks more of frustration without getting through. If you're in that position with contractor income not being properly reported by your employer, definitely worth using their service to get official guidance from the IRS.

Make sure you're saving at LEAST 25-30% of every payment you receive for taxes. I learned this the hard way my first year as a mechanic getting paid like you are. I thought I was making bank until tax time came around and I got absolutely destroyed by: 1) Regular income tax 2) Self-employment tax (additional 15.3% for Social Security and Medicare that normally an employer would pay half of) 3) Underpayment penalties because I didn't do quarterly estimated payments I ended up owing nearly $14,000 in taxes on about $52,000 of income because I didn't plan ahead. Don't be like me!

Don't forget about state and local taxes too! Since you mentioned working in a different township than you live in, check if both places have local income taxes. Where I live, I have to pay both city and school district taxes for where I live AND a local tax for where I work. It adds up fast.