How to Report Wages Being Paid Under the Table in Michigan
When you work for cash or are paid under the table, it is your responsibility to report your income to the Internal Revenue Service and your state's Department of Revenue at the end of each year. Depending on your course of work, the IRS considers taxpayers who receive cash payments as independent contractors. Because you are an independent contractor, you must pay both the employee and employer's portion of FICA (Medicare and Social Security) taxes. If you live in Michigan, you must follow the self-employment laws of the state and file the appropriate tax forms with the Michigan Department of Treasury and the IRS.
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Instructions
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Visit the IRS website, and obtain Form 1040, Schedule C and Schedule SE (see References).
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Complete Form 1040 using your records of cash payments from the venue. Generally, a record can consist of cash deposits to your bank account. Include all other forms of income.
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Complete Schedule C to report the cash income and out-of-pocket expenses to determine whether you received a profit or loss while performing services to the venue.
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Complete Schedule SE to determine the amount of self-employment tax that you owe the IRS. Generally, your self-employment tax will consist of Medicare, Social Security and any additional income tax owed on your cash income.
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Visit the Michigan Department of Treasury website, and obtain Form MI 1040.
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Complete Form MI 1040 using the information on the IRS Form 1040 (see Resources).
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File your forms electronically or mail the forms to the IRS and Michigan Department of Treasury. If you are not enclosing a payment, mail your IRS forms to: Department of the Treasury; Internal Revenue Service; Fresno, CA 93888-0002. If you are enclosing a payment, mail your IRS forms to: Internal Revenue Service; P.O. Box 802501; Cincinnati, OH 45280-2501. If you are receiving a refund, mail your Michigan forms to: Michigan Department of Treasury; Lansing, MI 48956. If you owe tax, mail your Michigan forms to:
Michigan Department of Treasury; Lansing, MI 48929.
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Tips & Warnings
If you do not have enough deductions to cover your self-employment tax and owe a large amount to the IRS and the Michigan Department of Treasury, it is important to plan for future tax years. The IRS and Michigan Department of Treasury require self-employed individuals to pay quarterly payments of self-employment tax to reduce your tax burden. Complete the IRS Form 1040-ES, Michigan Form 1040 ES and Michigan Form 4548 to calculate and pay your quarterly payments (see Resources).
The IRS and Michigan Department of Treasury might require you to complete additional tax forms, depending on your other sources of income and tax situation.
