im just wondering...my friend got a job and says he gets paid in cash. I was like..."wait, isn't that illegal?" he doesn't know. What are you thoughts? is it better to get paid in cash? what are the consequences of getting caught?

Technically, it's not illegal to be paid in cash, however it is illegal if he doesn't report it to the IRS. I think the penalty is that he will have to pay the taxes plus interest, plus a fine.

Depends.

If you are working for cash but do not make more than $600, than you are fine just the way you are.

HOWEVER should you make more than $600, then you are required by law to file a tax return with the IRS.

If you don't, more than likely the IRS will not know the difference. They will find out is you make an obscene amount of cash and funnel it into some sort of security.

The penalty... if you think its jail time than you can put your nervous to rest. Typically if the IRS finds out that you haven't filed a tax return, they will give you a deadline to submit the paper work and repay the taxes owed along with interest and a penalty.

Working for cash isn't illegal, but MOST of the time when an employer is paying cash its because they want to keep the transaction off the books so they can break other laws such as not paying FICA taxes, unemployment insurance, and not reporting the wages for income tax purposes.

Your friend is foolish to accept a position being paid cash under the table. He'll only save a nominal amount on income taxes, but it means he cannot collect unemployment if he's laid off, he can't use the income to qualify for a loan such as a mortgage or car purchase, and there is a very HIGH likelihood that he'll eventually get audited by the IRS. When he does get audited he'll get slammed with taxes, penalties for not reporting income, and interest charges. Additionally, he could be prosecuted and thrown in jail for tax evasion. Its just not worth trying to hide from the IRS.

No as long as the proper taxes are withheld. He should also receive a statement showing how much was withheld
No withholding then he is being paid off the books that is illegal and dangerous. No workman's comp, no unemployment and the IRS will prosecute him as well as his boss