Will this income effect filing?

[BrighterFuture]

I'm brand spankin' new to all of this and depressed as hell to even be posting, but here goes...

I work as a sitter for a family. Paid in cash.

It's not a whole lot, about $250/4 days of work. but it's a NICE job with LOTS of fringe benefits.

I love my job, I love the family, I love bringing my daughter to work with me (= no daycare expense)

My husband lost a franchise in April and work has sucked since. And things we'rent super before hand. We're in over our heads in debt and are debating filing.

But what about my income? If they look at my bank records, they will see deposits every week. But yet I don't do any kind of W2 or anything.

Help?

[magyar123]

Your husband's job is the only one that really counts as income. Have the family that pays you give you cash, and buy money orders for bills. Like that your deposits will not show up on your bank statements, only what he gets.

[BrighterFuture]

thats what I was thinking...I could also pay our rent in cash. Our rent is equal to just about my monthly income.

I just dont want to give up the job. I love it, and being with my daughter saves us $200+ a week in daycare costs, so it's like making a LOT more. PLus they pay for my zoo membership, childrens museum membership, food, etc...

the one problem...

we're in Wisconsin....is there anything special with the community property thing? I dont know if we can even file BK with only one spouse?

[jp2861]

I'd be very careful here. If you file, you'll be filling out income versus expenses worksheets. If your expenses are more than your income, and you're still meeting these expenses, it won't take a rocket scientist to see that you have income that you're not reporting. It's a little more than simply using money orders and avoiding deposits. The numbers don't lie. Example: If you have expenses of $1,500 and you only show $1,100 as income you may be asked where you're getting the cash to make up the other $400. I'm not giving any advice on what to do. Just saying be careful when you start playing around with the numbers too much. Is a fraud charge really worth it?

[BrighterFuture]

yea, that was my fear.

I was tempted to use the "i've been borrowing money from my parents" excuse, but maybe the courts don't like that either LOL

[WantToBeDebtFre]

If it's credit cards that are causing you to file bankruptcy, did you use your income on the application when you applied for those credit cards?

Being dishonest during a bankruptcy is a very huge problem. If the bankruptcy court find out that you lied about your income you can be convicted of federal fraud and/or you debts won't be able to be discharged.

You need to disclose this income. You can also claim this income on your taxes. Talk to your employer about this. If you're watching her kids she can also get a tax credit for paying for daycare.

If you don't have that much income you probably won't have to pay much in taxes.

Just my thoughts...

[SinkingFast]

There probably would be income tax owed on $250/week. That's roughly $12K for a year in income.

Plus, if you go back now, and amend tax returns for previous years, there could be interest and penalties due to the IRS. Plus the IRS could go looking at your employers as well if they aren't claiming the Day Care deduction. Think "Nannygate".

You definitely wanna tread very carefully here about how you spend the money. As WTBDF said, you can screw your whole BK by not being honest. If you lie about your income going in and the Court finds out,............ It can be punishable by disallowing the debts you filed on to ever be Dischargeable.

You have to give copies of bank statements to the Trustee. How many months depends on the Trustee. If your bank statements don't reflect paying your rent/mortgage and/or other routine living expenses, that's gonna raise more than an eyebrow. Gas, electric, phone, groceries, and such.

If you plan to say you're "borrowing from your parents", you'd best be prepared to list your folks as Creditors in your BK. You have to list all Creditors you owe money to when you file BK. You cannot pick and choose amongst your Creditors. If BK is something you don't want your folks to know about, it won't be secret long. All Creditors get mailed a notice of your filing.

[lrprn]

Your husband's job is the only one that really counts as income.

This is NOT correct. Any cash coming into the family during the six months before you file bankruptcy does indeed count as income for the required Means Test.

As SinkingFast said, you need to be extremely careful here. You are being paid a wage in cash. No taxes have been withheld by you and I'm betting your employer is not withholding any either.

You need expert legal advice about how to handle this situation. Set up 3-4 free initial consultations with experienced bankruptcy lawyers in your area. Lay everything out for them like you have for us. It's far better to KNOW where you stand rather than to guess yourselves or depend on opinions from mostly knowledgeable but non-lawyer strangers on an Internet forum. Keep us posted about what you find out, ok?

[CindyLou]

Very sticky situation. See the thing is here is that this employer could keep paying this cash and as long as it not deposited in to an account and just spent as incidental cash then no one would ever know. (not saying it right, so don't just on me, but let me tell you TWO scenarios here of how two people I know got into deep do do!)

1. My friend was paying her babysitter cash for two years. They had a verbal agreement that neither would file taxes. Well, the babysitter slipped and broke her wrist at her house and decided to file it on worker comp type claim. Well in order to do that she had to ammend her taxes. She didn't tell my friend ANY of this. My friend got his with a 12,000 medical bill and another 2000 employer tax bill plus penalties and interest plus fined!!!!! AND the nanny SUED her!!!!!
2.Another friend was working as a nanny and had a cash agreement. At the end of the year they parted ways. Apparantly the employer decided to claim the nanny as a household employee, paid her portion of the taxes and mailed a 1099 which my friend did not receive. Years passed. My friend received a tax assessment for $4000 which she had to pay.

I would certainly claim this income in your BK and on a go forward basis start claiming this as income on your taxes!! I don't think the BK court is going to report you to the IRS...that's not what they are in the business of doing, but I would certainly get advice from your attorney on how to answer those questions if asked.