People in financial difficulty are naturally trying to maximize their income in order to pay the bills. This often leads to working for an employer "under the table." This is a bad idea for three reasons.

You Still Have to Pay the Taxes

Unless you are willing to commit tax fraud by not listing the income on a tax return, you will still have to pay the taxes on that income. Strictly speaking, your employer must file a 1099 on your total gross income for the year, and you must put it on your tax returns.

But, since, you have not had money withheld from your wages to pay these taxes, you will have to pay them all at once in April. Do you think you will have the money?

It Can Foul Up Your Social Security

Also, what if you need Social Security benefits for retirement or a disability? Income "on the books" is reported to the Social Security Administration, not only in the form of the taxes withheld, but your work history as well.

If you work for any significant period of time "off the books," then later need to apply for retirement or disability benefits, you will be paid less than if you had reported the income because your earnings record will be deflated.

It Can Reduce Worker's Compensation Benefits

Finally, what if you are injured on the job? I consult with many clients in the construction industry. What I tell them is that if you are not on the company books as an employee, there might be a coverage issue for New Jersey worker's compensation insurance.

That is even if the employer has compensation coverage! But then, not having coverage may be the reason you are off the books in the first place! Now you are struggling to get treatment and disability income that you might have easily received if you were "on the books."

It can also be difficult to calculate temporary or permanent disability benefits accurately without "off the books" income information. One example is under-reported tips by restaurant staff. They may well end up getting less than they might while out on disability, because they can't substantiate their true income.

You Need to Fix the Debt Problem!

The best way to approach this is to fix the debt problem itself. If you only have a handful of debt that is out of hand, then you might want to consider seeking assistance in reaching a deal with the creditor.

Getting the debt under control will certainly make your life much easier and eliminate the stress. As a former creditor's attorney I have helped many people deal with situations like this by negotiating on their behalf.

But if this debt is not the only one, and you are wondering whether you need a solution to a bigger problem, then download my free book, Am I In Too Deep? A Guide to Knowing When You Need to File Bankruptcy in New Jersey to find out if bankruptcy might be the right solution. You could also just give me a call and come in to discuss it further!

If you live in southern New Jersey and would like to consult with me to find the right solution, feel free to call my office at 856-432-4113 or contact me through this site to schedule an appointment in my Woodbury office.


Steven J. Richardson
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Bankruptcy, Collections, Student Loan, DUI and Traffic Court attorney in Woodbury, NJ.