Uploaded June 2023 | Updated September 2026, 1 week ago
A huge mistake that comes up in business is something that doesn’t actually seem like it’s a big deal at all.
And that is, paying employees or independent contractors in cash. That’s cash money, you know, like dead presidents.
Here’s why. The all powerful Internal Revenue Service, can can disallow the deduction entirely. Meaning if you paid contractors like 50 thousand in cash, because I don’t know, maybe they’re not legal. Can I say that? Maybe the politically correct term is “unauthorized worker”.
Anyway, if you paid contractors in cash, the IRS can argue that you have nothing to evidence your cash payment, therefore you can’t deduct the expense on your taxes. This would effectively increase your taxable income by $50 thousand dollars. That’s about $15 thousand more in taxes you would have to pay the IRS.
🛑 Got a Side Hustle? File Your Own Taxes Without Hiring an Expensive Accountant!
noellorenzanacpa.com/how-to-file-taxes-for-your-side-hustle
💰 DOWNLOAD MY FREE TAX PREPARATION CHECKLIST HERE:
noellorenzanacpa.com/tax-prep-checklist
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noellorenzanacpa.com/10-tips-to-simplify-your-taxes
Hi, I'm Noel Lorenzana, a Registered CPA based in Illinois. I created this channel to help everyday people better understand money, protect their wealth, and prepare for whatever comes next through thoughtful discussions about gold and silver, wealth management, and tax strategy.
On, this channel, I simplify taxes for your business and offer tax tips for you! Let me know if there is anything you would like me to discuss. Feel free to connect with me on Social Media.
★CONNECT WITH ME ON SOCIAL MEDIA ★
Website: noellorenzanacpa.com
Facebook: web.facebook.com/noelblorenzana
LinkedIn: linkedin.com/in/noellorenzanacpa
Twitter: twitter.com/noelblorenzana
🎥 RECOMMENDED VIDEOS 🎥
youtu.be/S4tCyJz70xA
youtu.be/sO6ejHP9Knk
youtu.be/0VpMhQPM0Ak
Thanks for watching my video on, Uncover the Huge Mistake Business Owners Make - Revealed by an Expert CPA!
Disclaimer: The information presented in this video is for informational and educational purposes only and should not be considered accounting, tax, legal, financial, or investment advice. Watching this video does not create a client relationship. While I strive for accuracy, I cannot guarantee that all information is complete, current, or applicable to your specific situation. Always consult with a qualified professional before making financial, tax, or investment decisions.
Affiliate Disclosure: Some links in the description may be affiliate links, which means I may earn a commission if you purchase through them at no additional cost to you. I only recommend products and services that I have personally researched, use, or believe provide genuine value to my audience.
⏱️VIDEO CHAPTERS⏱️
00:00 - The Huge Mistake Business Owners Make
01:10 - Paying Contractors or Employees in Cash
02:00 - Paying in Cash and Tax Filing Requirement
02:20 - IRS Disallowed Cash Payments to Unauthorized Workers
03:17 - Paying in Cash Can Get You in Trouble With the IRS
Replay Video Link: youtu.be/pcnn_BHVXZw
#taxseason #taxwriteoffs #taxwriteoff
A huge mistake that comes up in business is something that doesn’t actually seem like it’s a big deal at all.
And that is, paying employees or independent contractors in cash. That’s cash money, you know, like dead presidents.
Here’s why. The all powerful Internal Revenue Service, can can disallow the deduction entirely. Meaning if you paid contractors like 50 thousand in cash, because I don’t know, maybe they’re not legal. Can I say that? Maybe the politically correct term is “unauthorized worker”.
Anyway, if you paid contractors in cash, the IRS can argue that you have nothing to evidence your cash payment, therefore you can’t deduct the expense on your taxes. This would effectively increase your taxable income by $50 thousand dollars. That’s about $15 thousand more in taxes you would have to pay the IRS.
🛑 Got a Side Hustle? File Your Own Taxes Without Hiring an Expensive Accountant!
noellorenzanacpa.com/how-to-file-taxes-for-your-side-hustle
💰 DOWNLOAD MY FREE TAX PREPARATION CHECKLIST HERE:
noellorenzanacpa.com/tax-prep-checklist
☕ Buy Me a Coffee: Help support the channel!
buymeacoffee.com/NoelLorenzana
📘 FREE EBOOK FOR ENTREPRENEURS!
noellorenzanacpa.com/10-tips-to-simplify-your-taxes
Hi, I'm Noel Lorenzana, a Registered CPA based in Illinois. I created this channel to help everyday people better understand money, protect their wealth, and prepare for whatever comes next through thoughtful discussions about gold and silver, wealth management, and tax strategy.
On, this channel, I simplify taxes for your business and offer tax tips for you! Let me know if there is anything you would like me to discuss. Feel free to connect with me on Social Media.
★CONNECT WITH ME ON SOCIAL MEDIA ★
Website: noellorenzanacpa.com
Facebook: web.facebook.com/noelblorenzana
LinkedIn: linkedin.com/in/noellorenzanacpa
Twitter: twitter.com/noelblorenzana
🎥 RECOMMENDED VIDEOS 🎥
youtu.be/S4tCyJz70xA
youtu.be/sO6ejHP9Knk
youtu.be/0VpMhQPM0Ak
Thanks for watching my video on, Uncover the Huge Mistake Business Owners Make - Revealed by an Expert CPA!
Disclaimer: The information presented in this video is for informational and educational purposes only and should not be considered accounting, tax, legal, financial, or investment advice. Watching this video does not create a client relationship. While I strive for accuracy, I cannot guarantee that all information is complete, current, or applicable to your specific situation. Always consult with a qualified professional before making financial, tax, or investment decisions.
Affiliate Disclosure: Some links in the description may be affiliate links, which means I may earn a commission if you purchase through them at no additional cost to you. I only recommend products and services that I have personally researched, use, or believe provide genuine value to my audience.
⏱️VIDEO CHAPTERS⏱️
00:00 - The Huge Mistake Business Owners Make
01:10 - Paying Contractors or Employees in Cash
02:00 - Paying in Cash and Tax Filing Requirement
02:20 - IRS Disallowed Cash Payments to Unauthorized Workers
03:17 - Paying in Cash Can Get You in Trouble With the IRS
Replay Video Link: youtu.be/pcnn_BHVXZw
#taxseason #taxwriteoffs #taxwriteoff
