[Spock]

I have a quick question. I have been working in my family business for around 4 years and while it has been good experience in general, I have been getting paid off the books. When I get a background check this experience won’t show up and I assume some red flags will be raised. How much of a problem will this be with the very rigid recruiting in banks and other institutions like big 4 and f500? Also, would this be reported to any tax authorities?

[ReneeNC]

How old are you? Are/were you a dependent of the family who owned the business you were working for?

REG - 89
BEC - 82
FAR - 87
AUD - 81
Used CPAexcel, Wiley Online Practice, and NINJA!

[Spock]

I am 26 now and for all but one year I was a dependent.

[Anonymous]

@Spock – I don't quite know how to say this without sounding offensive, so if I offend you, please know it isn't intentional. Per Circular E (link at the bottom) page 10, as a Family employee you were only exempt from Social Security and Medicare until you turned 21. All wages are subject to Federal withholding regardless of age. I can only assume that you reported the income you received because not filing a tax return or filing a fraudulent return is an act discreditable and will prevent you from holding a CPA license. That being said, I am assuming you filed your return correctly and reported this income. It could be a problem in your job hunt since you are showing a 4 year gap in employment. Employers don't like to see that unless you can explain it adequately. Good Luck in your job search and if I offended you, I apologize.

https://www.irs.gov/pub/irs-pdf/p15.pdf

[Spock]

Kricket, thanks for information. Also, no offense taken. I went to the IRS.gov website and filled out a few questions regarding wage/ income etc. and it said I did not need to file a federal income tax return. Basically because I was: single, not claimed as a dependent, made less than $9,500 and answered no to the questions on the bottom of the link page https://www.irs.gov/individuals/article/0,,id=96623,00.html.

Generally speaking is this something that will prevent me from being hired? Will it even show on a background check (I heard they just check criminal history, credit, and for employment I thought they only contact references) ?

Thanks again.

[KEMcpa]

If you have earned income you are responsible for Social Security and MediCare taxes. This can be accomplished via self employment taxes as a part of your tax return if you were paid as an independent contractor. Think the limit on that is $400. See item 3, chart C on page 9 of the 1040 instructions. http://www.irs.gov/pub/irs-pdf/i1040.pdf?portlet=103.

I don't if this will show up on a background check or not, but like Kricket said not filing required personal returns is a discredible act which can cause problems with CPA license.

Good luck with your job search.

Licensed Texas CPA!

[Author]

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