my son just got a job at a small body/restoration shop. they dont take out taxes.its his responsibility.?

is that legal?

Update:

he's being paid with a check. its a family run business thats been around for 20 yrs or so..

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  • 1 decade ago
    Favorite Answer

    The Internal Revenue Service publishes guidelines on the difference between an "employee" and an "independent contractor". In short, an employee is directed by the employer to perform a function and controls the person hired with regard to time, as well as how and when work is to be performed. An independent contractor is, more or less, someone who is self-employed, works at will, and controls the terms of how, when, and where they perform their services to a "client" or anyone with whom they contract to perform services.

    As an employee, the body shop is responsible to pay employment taxes on the gross wages paid to your son. These taxes include social security and medicare taxes (commonly known as F.I.C.A.), unemployment taxes (rates and responsibility may depend on the state in which he's employed), and disability. In addition, they are required to withhold social security and medicare taxes. Income taxes should also be withheld, based on the filing status and number of exemptions listed on your son's w-4 form, which he should have completed at the time of application, but before his first paydate. If the body shop fails to do this, they are in violation of federal employment tax law and possibly state employment tax law.

    As an independent contractor, since the person performing the services is considered self-employed, the contracting party is not responsible to pay their taxes. The person performing the services will be responsible to pay their own taxes. The taxes will include self-employment tax of 15.3% plus federal, state and local taxes.

    Although I can't be sure from your question, in your case, it appears that your son is not an independent contractor and is, in fact, an employee. However, by treating your son as an independent contractor, the body shop avoids paying social security & medicare taxes, unemployment taxes, and the administrative cost of maintaining payroll records and filing quarterly and annual payroll tax returns. If you can establish with the body shop that your son is actually an employee, by considering the above criteria, you can request that they treat him as an employee. If they disagree, you may ask your local IRS office to rule as to whether or not he's a bona fide employee. The downside of it all might be, though, that the body shop may let your son go for the "trouble" you may be causing them.

    Good Luck!!!

  • 1 decade ago

    That depends.

    If he was hired as a sub-contractor -- which some places do to keep from having to bother with payroll taxes -- then *he* is responsible for the taxes. He can expect to get a 1099 showing his total income at the end of the year.

    If he was hired as an employee, then the employer is responsible to pay the taxes. However, some employers will still pay "under the table" (strictly cash) to get out having to bother with payroll which then leaves your son in a sticky situation.

    As Mr. Payday stated, many people would say that this is the perfect opportunity to just "run with it" and not worry about taxes. No 1099, no w-2, just plain money free and clear. However, if this is a regular practice of the company, and your son doesn't claim any taxes at all -- there could be a problem should the IRS or the state tax board decide to come down on the company for fraudulent practices. The last thing your son wants on his record is tax fraud -- especially from his first job.

    No matter the situation, he should be paying taxes in some form. This is not a tax-free society, and the IRS doesn't play pussyfoot.

    Good Luck!

  • 1 decade ago

    Yes that is legal the body shop is paying your son as a contractor. Which put the responsibility in his hands to do a 1099 and pay his taxes. Many small business do this to avoid huge penalties for messing something up with the taxes especially with then don't have a payroll person. That body shop does have to give them a statement showing how much money he made at the end of the year. Then he will do his taxes from that. It gets complicated but that what it is. I've been doing that very thing for a few years now because i work for my brother's web design company.

  • 1 decade ago

    That would depend on his employment status.

    Was he hired as an independent contractor? If so, he is responsible for his own taxes, but I believe that there are other criteria to be met to be considered an independent contractor.

    Is he paid an hourly wage? This is easily determined if he gets a detailed pay stub. Something like "40 hours @ $20 per" etc.

    Your best bet would be to ask a tax professional, or check out the FAQ section of the IRS website.

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  • Anonymous
    1 decade ago

    First off, it is illegal. Second, is he being paid with cash. If he is being paid with cash, that's a different story...

    Please read this:

    The Five Most Significant Things Your Teen Needs to Know About Income Taxes

    When your teenager receives his first pay check, he will notice that he has had some money taken out for federal income taxes – quite possibly state and local taxes too. American companies are required by law to take this money out of all employees pay. This will seem strange to your teenager and he will have questions about it – especially since it has affected ‘his’ money. Here are the five most significant things you can explain to your teenager to help him understand income taxes:

    UPDATE:

    I would call the manager/owner and see what other employees there do...

    Source(s): About: Parenting of Adolescents --- Teans and Income Tax http://parentingteens.about.com/od/moneymanagement...
  • Is he working as a sub contractor? If he is getting paid by cash and no paper work he might not have to worry about it, but it would be wrong not to keep track and pay his tax's, SS.

    Sub contractors have to take care of their own tax's and SS, the Body shop will send a 1099 to the IRS and him at the end of the year instead of a W-2

    Source(s): I'm a contract worker
  • Anonymous
    1 decade ago

    He will get a 1099 form and he will have to pay taxes. If his income is significant he will have to prepay quarterly to the IRS or face late fees. If his income is low - you need not worry about this. If shop does not issue a 1099 - you are tax free unless you have a guilty conscious and want to claim what he made (you need not have a 1099) At worst you will have thrown out tax money and if your son is audited he will need to get the shop in trouble

  • Anonymous
    1 decade ago

    The real question is do they report the wages he earned to the IRS? If not start celebrating and don't file.

  • 1 decade ago

    It is their responsibility but he may not make enough to take out taxes.

  • Anonymous
    1 decade ago

    if they pay by check, yes it is his.most likely, they take out taxes from his paycheck.

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