How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Stephen G. Your Own Question
Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 7096
Experience:  Extensive Experience with Tax, Financial & Estate Issues
30050794
Type Your Tax Question Here...
Stephen G. is online now
A new question is answered every 9 seconds

For Virginia and/or DC tax people. Hi I have a "one man

This answer was rated:

For Virginia and/or DC tax people.

Hi I have a "one man band" consulting company.
I have a client who can't afford me :-(
He asked if I could charge them less and do it under the table.
1. Is this legal?
2. If it's ok, is there a limit? A maximum amount?
3. Can I get paid with a check or paypal?

Thanks

Stephen G :

Hi & thanks for using our service. I'll do my best to give you a complete & accurate answer. Please ask me to clarify anything that is not clear.

Stephen G :

Is this legal? - Sure as long as YOU report the income. It doesn't matter how you get paid, in cash, check, Paypal, gift certificates, whatever you want to accept as payment does not make it non-taxable.

Stephen G :

The last thing that you want to do is to agree to do something illegal and be a party to it. What your "client" is looking for is a discount because he wants to pay you in cash so there's no record of you receiving the money and then if you join the so-called "Underground Economy" & not report the income, you are risking a lot in terms of the trouble you could have. He on the other hand is doing nothing wrong because he's the one who is doing the paying; you will have done nothing wrong until you fail to report it on your income tax return for the year that you receive the payment, no matter what form it is in.

Stephen G :

If your business is slow and you want to give this "client" a discount, then do it & report the income just like you would any other income.

Stephen G :

Don't "get into bed" with some stranger (or anyone else) or you can bet it will be your luck that it comes back to haunt you.

Customer:

So eventhough I own a business, I can also get paid as an individual (non business owner related)?

Customer:

Do I have to report less than $500.00 a month as an individual?

Stephen G :

Yes, it is self-employment income.

Stephen G :

How does your company report?

Stephen G :

Is it a corporation, sole proprietorship, what?

Customer:

My Company is an S-corp. I'm the only member on it. I do business in VA only.

Customer:

The client who wants to pay me as a person, is in Washington, D.C.


If your client pays you the way you describe, you would need to file a Schedule C with your personal income tax return to report the consulting income. The better way would be just to deposit the money in your S-Corp just like any other income you receive. It should not make any difference to your client, and in fact there's no reason to even tell him. Just deposit the funds in the S-Corp and report the revenue just like anything else.

If you need to contact me again with any tax or financial questions, you can just ask for "Steve G" at the beginning of your question. Again, please remember to rate my response. Bonuses, where you think they are warranted, and excellent ratings, are always most appreciated. Thanks again for using JustAnswer.com.
Customer: replied 4 years ago.

Hi,


I'm not sure about something, if I'm registered as an S-corp to do business in Virginia, how can I get paid to do a job in Washington D.C. not as a business (S-corp)(instead personal) but put the funds in my S-corp company?


 


Thanks


Were you planning to register to do business in Virginia as an individual? As long as you haven't established an office in Virginia and set up a permanent place of business, performing an isolated engagement in Virginia and depositing the revenue in your S-Corp should not be a problem.
Customer: replied 4 years ago.


No I'm not planning to register to do business in Virginia as an individual.


But I do have my S-corp in VA.


I'm planning on posibly doing several jobs for this client who's office is in Washington D.C.


 


Could I just charge him as an individual and then just report the extra income when I do my taxes.


So even if I don't make a ton of money I still have to report it?


Yes you can charge him as an individual (as noted above)& then file a Schedule C with your individual income tax return.

Yes all of the income is required to be reported "even if you don't make a ton of money".

The income will be subject to both income tax & self-employment (social security) tax.
Stephen G. and other Tax Specialists are ready to help you