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So fun situation. I worked for a smaller coffee company here in Seattle. It wasn't anything amazing, but I was making between $1600-$1900 a month off maybe 25-27 hours worth of work. Considering my living situation, it gave me a great chance to start saving up for college, which I what I appreciated most about it. Of that, maybe $900-$1000 was wages, and $600-$800 was tips. In November of last year, I was let go. It wasn't anything I did, instead being a joint firing with another employee off something they did. It sucked, but gave me enough reason to apply for unemployment/get unemployment. Problem is, my old boss lied on his forms, and claimed I was only making $1000 a month total through wages/tips combined. I wanted to maintain a good relationship with him as a reference, and couldn't really wait another month for unemployment to start coming in, so I decided to not challenge it. At the time, I assumed tips just weren't covered by unemployment income, so it wouldn't be worth it to add another week by asking. Unfortunately, this led to me making ~$500 a month in unemployment, which wasn't even enough to cover my rent. To cover the deficit, I dipped into my savings/credit card while I looked for new work. Thanks to being in a slightly out of the way neighborhood/not really having the skills needed to find another job quickly in my line of work, it took me a bit to find a job, which ate into my savings/credit more then I'd have liked. But eventually I found a lovely job in the same field. From there I learned you are legally required to write out just how much you make in tips per month, so the IRS can tax you properly. When I went back and checked all my old checks from the previous company, I found that my old boss had been signing off tip slips for me every month, claiming I only made $100 a month in tips. I however have proof through bank statements/renters receipts showing I made $900-$1000 in wages every month, yet was still able to pay for my rent entirely through cash/tips, never taking anything from my bank account. This puts me at least at $750 a month in tips. So here's my prisoners dilemma, and something I'd like some business/legal advice on. Had I known about tips slips/tip reports at my old job, I would have done them at the end of the year for my tax returns. Instead I claimed that I only made $1200 a year in tips to the IRS two years running now, because that's what my boss put down on my W2s. So if I call up unemployment and let them know I should have theoretically been making more per month, won't they bring that information to the IRS as well, which will lead to me committing tax fraud/having to pay them what I owe them? I'm barely making enough month to month as is, so suddenly having to pay the IRS $5000+ isn't exactly feasible for me right now. The only reason I'm asking is because I quit that lovely job for a great job a few blocks from my house, and then they let me go today because the guy I was hired to replace wanted his job back. So now I get to hopefully get back on unemployment ( did I even work 680 hours this year? Hopefully! ), and I'd like to make at least enough to cover rent this time.
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Sep 17, 2014 05:24
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| # ? Apr 29, 2024 23:05 |
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This is not the place for advice on how to get away with cheating on your taxes. As far as the IRS goes, you are obligated to amend your last two years' returns with your estimates of your actual income and work out a payment plan for the past due taxes. If anybody has any info about dealing with the unemployment situation that would be great though 
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Sep 17, 2014 14:39
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I don't know how they adjust your benefits for income they didn't know about, but call unemployment and find out. They probably won't call the IRS, but they will want to see your amended tax returns and amended W-2s before they cut you your back benefits. The IRS will want you to pay taxes on those tips plus penalties and interest. Did you report the proper tip amounts to your boss or sign off on the $100 a week in tips? He will hang his hat on that. Otherwise if you told him you got $1000 and he put down $100 he might be liable for back employment taxes and penalties. Sounds like a sweet deal.
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Sep 17, 2014 15:14
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Rookersh posted:The only reason I'm asking is because I quit that lovely job for a great job a few blocks from my house, and then they let me go today because the guy I was hired to replace wanted his job back. So now I get to hopefully get back on unemployment ( did I even work 680 hours this year? Hopefully! ), and I'd like to make at least enough to cover rent this time. That's super super lovely that this new employer pulled this on you. If you want to be pissed at anyone be pissed at these guys. I don't think there is any way you can file back taxes or whatever you'd call it and end up money ahead. Your previous employer is stupid to allow you to not report tip income, but you were stupid to go along with it. The downside to this stupidity is that you could get hosed when: you claim unemployment or get audited. I'd guess your chances of getting audited are slim so I'd just let the past be the past. Now you need to look at cutting your living expenses and look into getting stuff like food stamps and whatever else you can get.
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Sep 17, 2014 16:00
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I'm going to advise you to contact an attorney, specifically one that deals with tax problems like yours. This sounds like a problem that can easily snowball into a major disaster if the IRS decides to audit you, or someone looks twice at your paperwork, or whatever the case may be. You're putting yourself on the hook for a federal lawsuit. Lawyer up and listen to the advice they give you. If your boss was the one who modified your W-2 or whatever, it seems to me that he should be the one liable for those back taxes. Talk to a lawyer
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Sep 17, 2014 17:00
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Rookersh posted:which will lead to me committing tax fraud/having to pay them what I owe them? You have already committed tax fraud. It is up to you to accurately report your tips to your employer, and to accurately report your full and total income from all sources to the IRS. By not doing that, you "owe" back taxes - it is just the case that the IRS probably doesn't care at this point and won't find out unless you tell them. I don't think Unemployment would be willing to modify your income for you without you filing an amended return for the years in which you are claiming the higher income. Filing an amended return would mean that you would have to pay the back taxes although you might be able to work out an installment plan. It is up to you whether claiming higher unemployment now outweighs the taxes you'd owe.
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Sep 17, 2014 18:59
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Elephanthead posted:I don't know how they adjust your benefits for income they didn't know about, but call unemployment and find out. They probably won't call the IRS, but they will want to see your amended tax returns and amended W-2s before they cut you your back benefits. The IRS will want you to pay taxes on those tips plus penalties and interest. It was my first tip based job, and I didn't know I had to sign off on tips. He knew how much I was making as he asked me several times how the money was at my store tipwise ( since I personally managed it. ) At no point did he inform me I had to fill out tip slips, he never gave me any TO fill out, and the when I asked about tipped wage when I got my first W-2, he told me he took care of it/it was already properly set up in the W-2. I was always terrified of W-2s, so I didn't take a close look at the tip income section until a few days ago. Before that I just sent it to a tax form company, they told me how much I'd get back, I said that'd be great, and went on my merry way. I plan to fix this with the IRS as soon as I get back on my feet. I'm just wondering if there is any sort of "Hey you weren't given the basic rundown of how this poo poo works, and your boss threw you under the bus because of it. Since you didn't know/the gain is so small we will just let this slide for now." clause for people who are naive enough to believe their first boss when they get told everything taxwise is under control.
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Sep 17, 2014 20:58
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Rookersh posted:It was my first tip based job, and I didn't know I had to sign off on tips. He knew how much I was making as he asked me several times how the money was at my store tipwise ( since I personally managed it. ) At no point did he inform me I had to fill out tip slips, he never gave me any TO fill out, and the when I asked about tipped wage when I got my first W-2, he told me he took care of it/it was already properly set up in the W-2.
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Sep 17, 2014 21:13
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What your boss did isn't uncommon in tip-heavy industries, and most people go along with it to soak in a bunch of cash tax-free. It's your call if you want to out yourself to the govt, but it's going to be a huge headache to fix, both tax-wise and unemployment-wise No there isn't any clause for believing him that saves you. They will hold you responsible, it's on you to look into this poo poo - you are responsible for yourself financially in their eyes, so 'he told me' is not an excuse. Personally I would just leave it and move on to find another job and suck it up as a learning experience. The extra couple hundo you might get from the few months of corrected UI will be heavily overshadowed by the stress of dealing with this, and I would not be surprised if you ended up spending more to fix it than you get back if things go sour while they're investigating. Plus, I doubt it would be resolved within a month or two, so it would not meet your immediate needs anyway. Good luck on your job hunt. StrangersInTheNight fucked around with this message at 21:27 on Sep 17, 2014 |
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Sep 17, 2014 21:23
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Just because you didn't know you were breaking the law doesn't mean you get a slap on the wrist. If you tell the IRS you will pay all the back taxes, plus penalty. Your employer will not get in trouble because it sounds like there was no tip paper trail and it becomes he says/she says. The IRS probably will never know or care about the few hundred you owe them. Just walk away and find a new job.
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Sep 17, 2014 21:35
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spwrozek posted:Just because you didn't know you were breaking the law doesn't mean you get a slap on the wrist. If you tell the IRS you will pay all the back taxes, plus penalty. Your employer will not get in trouble because it sounds like there was no tip paper trail and it becomes he says/she says. This. It will likely not be worth your headache to pay all the back taxes + penalty + interest to get the adjusted unemployment (if you can even actually get it). Plus admitting this to the IRS will make you more likely to be audited in the future. Hire an attorney to help you with this. The costs of back taxes/penalty/fines + attorney will likely be greater than whatever you can get from UI compensation.... Chalk it up to a learning experience.
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Sep 22, 2014 05:28
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