20 Dec Are ‘under the table’ cash payments illegal?

Q. I have a housekeeper who I think is here illegally. I pay cash once a week for her to clean. It’s all under the table. If she is ever deported, do I need to worry about these tax-free payments I give her?
— Law breaker?

A. By “under the table,” we assume you mean you’re giving your housekeeper cash with no taxes taken out.

This is always illegal for the employer, said Bill Connington of Connington Wealth Management in Paramus.

And, Connington said, if the employee does not report the income and pay taxes on it, it’s also illegal for the employee.

“The Internal Revenue Code maintains that the immigration status of your housekeeper or other employee has no bearing on your obligation for employment taxes,” Connington said.

But, he said, employing an undocumented worker is a violation of immigration law.

“Failure to pay employment taxes for any worker, legal or undocumented, is felony tax evasion,” Connington said.

What you decide to do is of course up to you, and there are a whole lot of households that do employ or use illegal workers.

“That option is up to you and no, the IRS is not actively walking around to see who is, but if someone does report it, then you need to have an idea of what you could be looking at,” he said.

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This post was first published in December 2016.