How to File Taxes When Income Is Only Paid in Cash

If you are paid in cash you still owe taxes

If you are paid in cash by your employer, you still have to pay taxes as the IRS considers you self-employed. You must pay estimated taxes, and depending on how much you make, you may be required to file your taxes quarterly. If you expect to pay less than $1000 in taxes, as of 2010, you can wait to pay the tax until you file your return. You can download the tax form or get it from your local IRS office. Call 800-829-3676 to receive it by mail.

Things You'll Need

• Form 1040-ES
• Publication 505
• Internet access (optional)
• Credit or debit card (optional)
• Receipts for expenses

Instructions

Estimated Taxes

1. 

   Keep a tax record for your next installment

   Calculate the amount of cash you expect to receive in the year, or if the year is over, how much you have made. Read Publication 505 to determine if any of your expenses are deductible. Total these up and write the total down. Complete the worksheet, including the record of your estimated tax payments. Complete the voucher that comes with the form. Ensure you keep the tax record for your next installment.

2. Place the payment voucher in an envelope with a check or money order. Make it payable to the United States Treasury. Enter the numeric amount you are paying in the format $XXX.XX. Do not enter $XXX- or $XXX xx/xx. Write "2010 Form 1040-ES" and your social security number on the check or money order. Enclose your payment voucher but do not staple or attach it to your payment. Check the instructions for your regional tax center. This is where you mail your check.

3. Go to irs.gov and put "e-pay" in the search box. Click on the "Electronic Payment Options" homepage. Pay electronically via three options; the Electronic Federal Tax Payment System (EFTPS), Electronic Funds Withdrawal (EFW), or by credit or debit card. EFTPS lets you schedule your payments for free, up to 365 days in advance, from your checking or savings account, and also allows you to cancel future payments if necessary. Go to eftps.gov. If you choose EFW you can schedule four quarterly payments to be withdrawn from your checking or savings account. Your last option is to pay by debit or credit card. To exercise either of the last two options, follow the links on the "Electronic Payment Options" page.

References

• IRS: Estimated Tax Form 1040-ES
• IRS: Forms and Publications by mail
• EFageTPS Home P