The underground economy

[editec]

o do tell....and does anyone care at this point....o that is your sardonic way of pointing out its socialism?

You talking to me?

Barter isn't socialism.

It just isn't capitalism.

It's barter.

Hence the special word we use to describe it.

 

[alan1]

Damn, all these tax cheats.

If I pay somebody to mow my yard and he doesn't declare the income, that isn't me cheating on my taxes.

 

[Ravi]

Damn, all these tax cheats.

If I pay somebody to mow my yard and he doesn't declare the income, that isn't me cheating on my taxes.

Technically, it is...you are supposed to 1099 him.

 

[submarinepainter]

In hard times, barter always expands. People have a tendency to blame the government for the hard times, and feel some justification in beating the income tax system. Deep down inside, I have to admit that I am a little bit happy for them. I guess I blame the system, too.

Barter is alive and well where I live , I have a garden I am trading Tomatoes and Cukes For eggs , I will throw in the squash for free .

 

[alan1]

Damn, all these tax cheats.

If I pay somebody to mow my yard and he doesn't declare the income, that isn't me cheating on my taxes.

Technically, it is...you are supposed to 1099 him.

And that affects my taxes how?

 

[RodISHI]

Damn, all these tax cheats.

If I pay somebody to mow my yard and he doesn't declare the income, that isn't me cheating on my taxes.

Technically, it is...you are supposed to 1099 him.

Only if it is over $600 a year he pays out and then he only needs to if he wishes to deduct that on his business expenses. (Unless that amount has changed in the last few years)

 

[Ravi]

If I pay somebody to mow my yard and he doesn't declare the income, that isn't me cheating on my taxes.

Technically, it is...you are supposed to 1099 him.

And that affects my taxes how?

It doesn't, but if you don't report it and he doesn't report it and you know he doesn't it isn't much different than a company hiring illegal immigrants.

 

[Ravi]

Also, it appears bartering is also taxable.

Bartering
Bartering is an exchange of property or services. The fair market value of goods and services exchanged is fully taxable and must be included on Form 1040 in the income of both parties.
An example of bartering is a plumber doing repair work for a dentist in exchange for dental services. Income from bartering is taxable in the year in which the taxpayer received the goods or services.

Reporting Miscellaneous Income

 

[alan1]

Technically, it is...you are supposed to 1099 him.

And that affects my taxes how?

It doesn't, but if you don't report it and he doesn't report it and you know he doesn't it isn't much different than a company hiring illegal immigrants.

I'm not a company, I'm a private individual. He is a US citizen, not an illegal immigrant. It's less than $500 a year.

 

[alan1]

Also, it appears bartering is also taxable.

Bartering
Bartering is an exchange of property or services. The fair market value of goods and services exchanged is fully taxable and must be included on Form 1040 in the income of both parties.
An example of bartering is a plumber doing repair work for a dentist in exchange for dental services. Income from bartering is taxable in the year in which the taxpayer received the goods or services.

Reporting Miscellaneous Income

The state I live in also says you have to declare barter transactions on the state tax form.

 

[Ravi]

And that affects my taxes how?

It doesn't, but if you don't report it and he doesn't report it and you know he doesn't it isn't much different than a company hiring illegal immigrants.

I'm not a company, I'm a private individual. He is a US citizen, not an illegal immigrant. It's less than $500 a year.

It's still taxable income that he isn't reporting. You may not be in violation of the law but ethically you are contributing to his cheating of fellow citizens.

Personally, I don't really care. It just cracks me up when people condone this behavior so often but at the same time have a hissy fit if companies do almost exactly the same thing by paying illegal immigrants under the table. (Not you in particular, I've no idea if you are one of the hissy fit kind).

 

[editec]

If I pay somebody to mow my yard and he doesn't declare the income, that isn't me cheating on my taxes.

Technically, it is...you are supposed to 1099 him.

And that affects my taxes how?

Theoretically the losses in taxes due to the underground economy means that you have to pay more taxes as a result of that.

In theory... in reality, I suspect that that the underground economy is probably beneficial to the society as a whole since a lot of people are doing better because of it.

That means they can go to the store and buy stuff which naturally is actually helping the above-ground economy, too.


The loser here (I suppose) is basically the governments which would like to charge every person for every cash transation which take place in the world.

Screw them, they already steal enough from us.

 

[editec]

Also, it appears bartering is also taxable.

Bartering
Bartering is an exchange of property or services. The fair market value of goods and services exchanged is fully taxable and must be included on Form 1040 in the income of both parties.
An example of bartering is a plumber doing repair work for a dentist in exchange for dental services. Income from bartering is taxable in the year in which the taxpayer received the goods or services.

Reporting Miscellaneous Income

In theory, one is supposed to devclare every transation and declare what the good or services are worth and compute your share of the taxes based on that.

My guess is not 1% of all barter transactions are so noted on anyone's taxes.

 

[alan1]

It doesn't, but if you don't report it and he doesn't report it and you know he doesn't it isn't much different than a company hiring illegal immigrants.

I'm not a company, I'm a private individual. He is a US citizen, not an illegal immigrant. It's less than $500 a year.

It's still taxable income that he isn't reporting. You may not be in violation of the law but ethically you are contributing to his cheating of fellow citizens.

Personally, I don't really care. It just cracks me up when people condone this behavior so often but at the same time have a hissy fit if companies do almost exactly the same thing by paying illegal immigrants under the table. (Not you in particular, I've no idea if you are one of the hissy fit kind).

I don't throw hissy fits, I prefer to whine and snivel instead.

 

[editec]

I'm not a company, I'm a private individual. He is a US citizen, not an illegal immigrant. It's less than $500 a year.

It's still taxable income that he isn't reporting. You may not be in violation of the law but ethically you are contributing to his cheating of fellow citizens.

Personally, I don't really care. It just cracks me up when people condone this behavior so often but at the same time have a hissy fit if companies do almost exactly the same thing by paying illegal immigrants under the table. (Not you in particular, I've no idea if you are one of the hissy fit kind).

I don't throw hissy fits, I prefer to whine and snivel instead.

Me too.

But only until the torch and pitchfork crowd rolls out the gillotine.

Then I'll cheer right along with the rest of the bonne hommes.

 

[Ravi]

Technically, it is...you are supposed to 1099 him.

And that affects my taxes how?

Theoretically the losses in taxes due to the underground economy means that you have to pay more taxes as a result of that.

In theory... in reality, I suspect that that the underground economy is probably beneficial to the society as a whole since a lot of people are doing better because of it.

That means they can go to the store and buy stuff which naturally is actually helping the above-ground economy, too.


The loser here (I suppose) is basically the governments which would like to charge every person for every cash transation which take place in the world.

Screw them, they already steal enough from us.

Pretty much. You can use the same arguments to justify employing illegals under the table.

You could also make the argument that paying a tax cheat to cut your grass isn't fair to legally organized lawn service crews that report their income.

 

[alan1]

And that affects my taxes how?

Theoretically the losses in taxes due to the underground economy means that you have to pay more taxes as a result of that.

In theory... in reality, I suspect that that the underground economy is probably beneficial to the society as a whole since a lot of people are doing better because of it.

That means they can go to the store and buy stuff which naturally is actually helping the above-ground economy, too.


The loser here (I suppose) is basically the governments which would like to charge every person for every cash transation which take place in the world.

Screw them, they already steal enough from us.

Pretty much. You can use the same arguments to justify employing illegals under the table.

You could also make the argument that paying a tax cheat to cut your grass isn't fair to legally organized lawn service crews that report their income.

Sometimes I even give the guy a beer or two after he is done. How do I 1099 that? And, is giving alcohol as a bonus breaking any ATF laws?

 

[manfromva]

The underground economy is why we should abolish the IRS as we know it and start a national sales tax. It should be no more than 10% for the feds and the states can set their own from there. The IRS can keep 10,000 employees to audit the states. the states can audit the counties/cities. the counties/cities can audit the businesses. I don't believe services should be taxed either...just let everyone do any job they want and just pay taxes when they buy something new.... companies would be flocking to america the land of opportunity. All sales taxes will be collected bi-weekly from businesses and the govt will not be able to spend more than it takes in.