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What does It Mean to Pay Someone "Under the Table"?

Tricia Christensen
Updated May 16, 2024
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The phrase "paying someone under the table" refers to unreported compensation for work. This is a common type of illegal payment from an employer to an employee. Generally, both parties agree to hide the financial transaction in hopes of evading civil, criminal, tax, or immigration laws. Cash is the most common payment method in these situations, since it's hard to trace.

When Compensation Is Illegal

When a business hires an employee or independent contractor, it typically must collect identifying information about him or her and submit it to a tax department. That information is then used to collect taxes from the business and employee, which help pay for government services, like road maintenance and educational funding. The exact terms and collection procedures vary from country to country.

Issues arise when a business does not provide information about an employee who is receiving financial compensation. When this happens, the employee has the opportunity to not report his or her income and thus not pay any taxes on it, and the business can also avoid paying payroll taxes. By doing this, both parties are committing tax evasion. Most countries consider tax evasion to be illegal and punishable by a fine, prison time, or a combination of both.


One of the most common motives for paying someone under the table is tax evasion. The more employees a company or business has, the more payroll tax it has to pay. A simple, yet illegal, remedy is to pay someone in secret without involving the government. Other businesses sometimes hire illegal aliens or unauthorized workers so they can pay them very low wages. This is illegal in many countries, however, so business often pay these people under the table to avoid possible fines and sanctions.

Another motive is engaging in criminal activities. Criminal syndicates tend to avoid keeping records that may implicate them in a crime, including traceable payment transactions for things like narcotics, stolen items, or product knockoffs. Instead, they choose to pay people secretly using untraceable means.

Pros and Cons of Cash

The payment method of choice for illegal transactions is usually cash. It is generally not as easy to trace as credit cards or checks, which leave a paper trail. This is not a foolproof method though, especially for those who regularly deposit their secret earnings in a bank. Most financial institutions flag customers who make unusually large deposits of cash or multiple smaller deposits consecutively, and may be required to report information to the government about them. If a person has discrepancies between his or her tax paperwork and bank statements, he or she may be audited.

Legal Instances

Paying someone under the table is not always illegal. This is especially the case when employing people for odd jobs or babysitting. In many regions, a child under a certain age may not have to report revenue earned from things like babysitting or lawn mowing. Generally, anyone can legally be paid under the table if their wages are under the minimum reporting amount set by the government.

Freelancing vs. Illegal Payment

Receiving payment under the table is very different from working as a freelancer or an independent contractor. In this situation, businesses report all wages paid to freelancers to the government, if the payments are over a specific amount. Even though freelancers don't have their taxes taken out of each paycheck like other waged workers do, they still have to file and pay their taxes at the end of the tax year.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Tricia Christensen
By Tricia Christensen
With a Literature degree from Sonoma State University and years of experience as a SmartCapitalMind contributor, Tricia Christensen is based in Northern California and brings a wealth of knowledge and passion to her writing. Her wide-ranging interests include reading, writing, medicine, art, film, history, politics, ethics, and religion, all of which she incorporates into her informative articles. Tricia is currently working on her first novel.
Discussion Comments
By anon947102 — On Apr 24, 2014

If somebody asks to be paid in cash, it's usually because they want to stay off the books and away from the IRS for whatever reason. Maybe they don't want to pay child support, maybe they have bad credit and can't get a checking account, maybe they have no ID because they can't afford the fees associated with getting the ID back, maybe they're on disability or unemployment and will lose their benefits if the cash work goes over a certain amount. Lots of reasons exist. Not everybody is attempting to be illegal or immoral.

That said, if you, the employer, don't want to be associated with that cash payment option, then you have the right to say no to the potential employee. Hire somebody else. But offering to pay someone cash and then requiring a Social Security number before you pay them is just as dishonest. Why would any employer offer to pay cash and then demand a Social Security number? I can only assume it's because the employer isn't as moral as they're pretending to be and is instead trying to force the employee to walk away without getting paid after the work is already done. That's going to leave the employee in a position to have to give you a fake Social Security number just to get paid.

To the people looking for a cash job, ask the employer straight out if they're paying you cash with no questions asked or if they're going to demand a Social Security number before they pay you. It's then your choice to take the job or leave it.

By anon344549 — On Aug 10, 2013

I have a friend who has worked for a local motel but has never been paid. Now the manager of the establishment wants him to vacate the motel. What rights does he have?

By anon314027 — On Jan 15, 2013

I know someone who is working as an independent contractor and is being paid monthly with bill pay. Can that be traced back to the person, or the employer?

By anon278825 — On Jul 09, 2012

I know of someone whose son pays him under the table in cash. This man brags that he has not paid income taxes in years, yet he makes $1 million a year. How come people like him and his son never get caught?

By anon261495 — On Apr 16, 2012

I get paid cash and so I didn't know we had to claim it. Now at the last minute, the person who pays me wants my social security number, when they never told me what they were going to do when they hired me four months ago. Does anyone know if I am obligated to give my name out?

By anon250426 — On Feb 25, 2012

The person who is paying rent without a lease:

It is the law that

1. In order to evict a person you must have a signed lease and you should have been given a copy.

2. Otherwise the landlord is in violation of a petty misdemeanor (they carry real penalties;

3. He can't serve you with an eviction or 30 day notice because he has no right without a lease or contract;

4. He can't even charge you with an unlawful detainer, since you don't have a lease but yet you have been paying him rent (hopefully with a check or Money order).

5. Get evidence (and lots of it) that you have been paying rent, record your conversations, have friends or relatives make statements that you have been paying rent or better yet, that this is a brand new requirement, and that he has told you to stay as long as you like!

6. All judges want to see is a lease, a notice to quit (30 day or three day notice) and a demand for payment.

7. Get the records to show that you have been paying or that you never did have to pay and the judge will have no choice.

By anon243241 — On Jan 26, 2012

I was housecleaning for someone and got paid about $300 in 2011. I do not know if he is going to claim that as expenses. How do I go about and put it on my 1040 without a w-2?

By anon219893 — On Oct 04, 2011

I worked in 2007 with some cleaning company LLC, for two or three months. It's the first time I came to the USA. They paid me cash, and held some money from my salary to pay taxes. And they asked me to give them a SSN or they will not pay me, so I gave them one, but I never signed anything.

This year 2011 I found out that I didn't pay my income tax 1099 for 2007. It is almost 26,000. I would be so lucky if it would be true! I can't find that man. what should I do?

By anon214331 — On Sep 14, 2011

@arcap: I have a suggestion. Actually, I think my suggestion might work for several of the posts here. So the father of your grandson is bragging about his ability to avoid being a proper human being. So hit him where it hurts: go directly to his employer and inform them of the situation, and how their actions are hurting your family. This should alert them to the fact that their shady practices are in imminent danger of being reported to authorities, who just love to audit people in these tough times (gotta justify that tax expenditure).

Unless they're very stupid, they will start paying him properly, and now your daughter can file for child support. If they're stupid and fire him to avoid paying the legal way, then they're just asking to be reported (by him) anyway, and in some small way, justice will have been served.

I say more people could benefit from this because it's something anyone can do. When the government fails to protect the citizens, even with the huge taxes we pay, then the citizens need to get back to basics and start talking to each other. You don't always need a lawyer.

By anon177088 — On May 17, 2011

I pay my father $300 in rent every month and have done so for the last two years. now we are running into conflict with each other and i am being threatened to be put out of my home and he wanted to make the point that he is above the law and since there is no paper trail that it would not hold up in court even though multiple people know of our deal and my bank statements and his monthly deposit bank statements show this money leaving me and going to him.

i don't know where to really turn to for help, so if anyone has anything that i could use better understand tax laws, feel free to reply to this post. i need help.

By anon174210 — On May 09, 2011

My boyfriend hired someone to do a job for him and paid them $400. The person would not give him his social security number because he did not want to pay taxes. Now we have to pay the taxes on this money? Should we tell someone? What do we do? I wish they would go to jail.

By anon172395 — On May 03, 2011

My current boss pays five employees under the table, while paying two of them on the book pay also. She operates a consignment store that is profitable. How is she able to get away with this?

By anon112249 — On Sep 19, 2010

Everyone, I honestly cannot think of an answer on where to go to. All I know is, if it is work-related (like at Subway), then go to WCB or The Better Business Bureau. If this is babysitting and if the person has screwed you over, report it to your local Ministry of Child Services.

I used to babysit for an old bag, but I gave that up a few months ago, she sucked 10 years out of my life and I am glad I walked away. i have seen this ungrateful woman support my family in a crappy time of need. Even though I am a little scared of what she could do to me in court (in which I highly doubt it will happen), I am not afraid of her because I have the upper hand: an audio tape and some receipts from money mart.

So the next time if you guys want to get paid cash, ask them for a check, if they say no, make sure it is recorded, then file it with the police.

By anon55424 — On Dec 07, 2009

my daughter is 17 and has been looking for a job. She found one at a local laundromat. They pay cash under the table so it's not reported.

She wants to work for them but I feel this is illegal and don't want her to get involved. Being a teenager, the dollar signs speak louder than I do! Is this employer acting illegally and if so, who do you report it to? Thanks for any advice.

By anon54445 — On Nov 30, 2009

I know someone who is currently getting paid under the table but yet the employer still takes money out of her check. Other employees who work there have never filled out a W2 form. What advice can i give these people

By anon50623 — On Oct 30, 2009

anon22144: my ex is doing the same thing with 1099 vendor contracting and avoiding child support, and he gets 50 percent of the time with our son. there is no such thing as gender biased courts where i live. i am broke, can't afford rent, was a stay at home mom in that marriage for 22 years, while he is a sales exec under his 1099 living the high life, attached himself to a girlfriend who pays his bills, and now together they bought him a house and new car. What court system do you live in? the court system changed years ago in favor of the father and his rights. And you say fathers should be able to get away with this? You must be a father yourself. the interesting thing is, he makes our son a basket case and his grades drop every time he is visiting. We had a guardian adlitem involved twice, but each time he covers his tracks, and the court could care less that he lives with a girlfriend and he is not home with him half the time. All the court cares about is dad gets his 50 percent time. doesn't care how he treats him.

By anon44584 — On Sep 09, 2009

i work at a subway and they pay me under the table. i feel i have been mistreated and i want to report. how would i go about doing so?

By anon35271 — On Jul 03, 2009

I work in a restaurant and my employer paid me cash but they also give paste of my tax reduction. My question is why is it they are paying me cash and still have tax reductions? is this illegal or legal?

By anon22144 — On Nov 29, 2008

arcap: Good. I hope he runs and never pays his support. Maybe when the courts are not so gender biased and allow fathers to be fathers again, you won't have to worry about him doing this sort of thing. In the mean time, I found this site looking for ideas to do exactly the same thing. ta ta and good luck.

By anon7320 — On Jan 24, 2008

I am a contractor and paid a guy who gave me a false social security number. I need to 1099 him but have no social security number. What can I do?

By anon7287 — On Jan 23, 2008

Can you send 1099 to an independent contractor or freelancer that has done work on a house for you? I am not a company, just an individual. Paid this person over $5,000 this year. I know he will not report it.


By arcap — On Nov 09, 2007

The father of my grandson has not paid a penny of support in 16 months of the child's life. He works as a cook in a restaurant and brags that he won't have to ever pay any child support because he gets paid under the table and on the books he makes very little money.

My daughter is trying to get this issue into court but we're trying to figure out how to counter this problem before she files. Is there a way to prove he's avoiding tax this way (not to mention the child support? Is it better to file and then bring this to the attention of the court or is it better to approach the restaurant owner and advise him he will be reported to the IRS??

Appreciate any suggestions. (We can't afford a lawyer)

By anon2831 — On Jul 27, 2007

I was recently working for a restaurant who paid their employees under the table. I am on employment insurance right now and I had claimed all my hours until I found out it was under the table. My boss then offered to give me a lay off slip and pay me cash instead of checks, which she did not. I quit after a month because I didn't like the dishonesty and was worried about getting into trouble with employment insurance. If it was brought up who would be in trouble me or my boss. Could I have still reported my hours? If I was honest and phoned employment insurance for questions would they cut me off?

Tricia Christensen
Tricia Christensen
With a Literature degree from Sonoma State University and years of experience as a SmartCapitalMind contributor, Tricia...
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