IRS help

[cupcake]

Here's the story. I am not sure what to do or where to post this. I have called the IRS a few times, but received different answers every time or am transfered all around in circles. Oops!

Last year, my husband worked for cash. There is no record of him at all working for this man. This man will also not provide him with proof of employment so we can file taxes. He also told my husband if we are audited and my husband says he worked for this person, this person will deny it.

We are not looking for a return, we just want to file so we don't get in trouble. The IRS is scarier than immigration. If we are audited, bank records will be accessed and they will be wondering how we were able to make deposits regularly if there was supposedly no income. My family said we could say they were giving us money, but then this would lead into a HUGE audit and lots of drama.

I did not work at all last year. In previous years, I have done all the 'bread winning' and always filed head of household.

My husband become a legal resident in December 2007. One time I called the IRS and said no one worked at all (to see if I could get a different angle on things) and they said we don't need to file since there is no proof of working, etc. and it is possible that my husband actually earned below the limit in order to file (married filing jointly) even if we did file. So even if we had proof, we may not need to file anyway.

I am just not sure how to handle this. We can't really file because there is no proof of employment, if I understand what some people at the IRS have told me. But if we don't file, we may be audited. I am somewhat terrified.

If anyone knows a good tax accountant I can pay to talk to, please let me know. Or if you have any resources, please let me know as soon as possible. We have been trying to figure this out since February.

[cupcake]

I am bumping this because I have another question. If we do file, would we file married filing jointly? Please, tax-know-it-alls. I need your help! :innocent:

[angela256z]

You need to file 2007 taxes and go ahead and add him and just put no income for him. Most audits that I know have happened was because people got to much money back cause the taxes were done wrong if there is no income to report I don't see why you would get in trouble for having deposits. This is my own opinion, but I don't see why you would get into trouble.

[JennyM]

Since your immigration problem is over I would just put "none" because the only way they will know is if you get audited and they pull your bank records. A lot of tax accountants will tell you to put 0, mine told me too until I told her what we were doing. Its entirely up to you. You can file however you want. It doesn't really matter.

[discoviking]

If you want to show some income, you can always file a 1040ES for 2007, make a payment and report it as self employment income on your regular 2007 return. It's up to you. I have a friend who is a tax lawyer, I'll email him and see what he thinks.

[cupcake]

Wow, that would be beyond kind of you, discoviking.

Extra info: Today, I added the amounts we deposited over the past year, and if I saw all of the info correctly, it was under $17, 500.

[discoviking]

Ok, I spoke to my tax lawyer friend today. His opinion is that in order to stay within the law and not have any issues with the IRS, you should file a schedule C and report the cash income as self employment income. If the IRS wants to know where the income came from, you state your husbands employer. If the IRS states that the employer denies your husband ever worked for him, your answer should be: "My husband reported this income and where it came from. It would have been easier for us not to report it at all, but we want to abide by the law and pay our taxes. My husband's employer is suggesting we commit tax evasion which is a crime, and we will not do that. Why would we make this information up?"

If there is an audit you should be in the clear, since you reported the income and paid your taxes. The employer is the one who has committed several crimes and it will be an issue between the employer and the IRS at this point. By law the employer is required to withold income tax, social security and medicare taxes, and file all appropriate forms. If he does not do that, it's his problem not yours - as long as you report the income and pay your state and federal taxes.