Occasionally, when interviewing a client for bankruptcy, I am told, "Well, I do work for this guy, but it is under the table/off the books." The reason for this is that they cannot pay the bills on their income if taxes are deducted.
The fraud consequences of not declaring this income on your tax return aside, this strategy is always a bad idea. What most people do not realize is that the downside to doing this exceeds the short term benefit of the tax savings.
It Can Hinder You from Filing Bankruptcy
One of these downsides is if you have to file bankruptcy! I have had clients that have not been able to do so because they or their spouses had under the table income that would come to light through the bankruptcy petition. This can happen either by disclosed income in the petition that did not line up with tax returns or because they simply could not document it for some of the income analysis required under the code.
The bottom line: there is such a thing as being too clever for your own good. Bite the bullet, work on the books, and pay the taxes. You will be better off in the long run, and be able to file bankruptcy for a fresh start.
So What Should I Do?
If you live in the Gloucester County New Jersey area and are thinking about filing bankruptcy, please call my office at 856-432-4113 or contact me through this site to schedule a free consultation to discuss your case. Getting rid of crushing debt might just make it easier to live on your income after paying the taxes!
If you are looking for more information about bankruptcy, then download my free book,Top Questions People Ask About Filing Bankruptcy in New Jersey.