Side work for Cash and Uncle Sam


S

Spin

Gurus,

This guy I know owns a business. I have been doing side work for him. He
cuts me a check for $5,000 per month. We also have the same bank at which I
only have a savings account. What I do is cash that check immediately and
use the cash as spending money. He says don't worry about anything nobody
cares about a small guy with a savings account and the check turned to cash
transaction is not tracked anyway. This all started in February. What will
be my tax consequences for all this? I realize if I wasn't a good American
I could probably get away with not declaring this on my income taxes for
next year but somehow I don't think Uncle Sam will agree and neither does my
conscience. So I need to know what to do.

I believe what I can do is sock 45% of it away into a traditional or Roth
IRA which will relive some of the tax burden. Other than that I do not have
any business expenses I can really deduct.
 
J

Jim Kingdon

I realize if I wasn't a good American I could probably get away with
not declaring this on my income taxes for next year but somehow I
don't think Uncle Sam will agree and neither does my conscience.
So you file a Schedule C-EZ.
I believe what I can do is sock 45% of it away into a traditional or
Roth IRA which will relive some of the tax burden.
Traditional, yes. Roth won't help with your tax burden this year
(although it will once you start withdrawing from the IRA). Either
one has a limit of something like $4000 or $5000 (look it up).

There's charitable contributions, if you feel so inclined.

Or you just pay the taxes....
 
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