For a worker, being paid this way leaves you with no legal protections or proof of income. The better approach is to be classified as an independent contractor, where payments are formally reported to the IRS on Form 1099-NEC. 1️⃣No proof of income: Without a verifiable payment trail, it is impossible to prove your income, making it difficult to apply for a mortgage, car loan, or apartment rental. 2️⃣Loss of benefits: You lose out on the chance to contribute toward Social Security and Medicare.
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