<prompt> Human: About 1 year ago just after college, I naively began working for a family friends start-up company, which Im slowly realizing may be shady. I received an offer letter, but I never signed a W-4 or contract of any kind, and have never received a paystub. I have also begun to suspect he did not report me as an employee e.g. paying unemployment tax, and therefore is not withholding taxes from my paychecks.I have been paid sporadically via direct deposit from a company account about 15,000 so far. I no longer work for him, but he is still sending me money for back-pay owed to me since they didnt have enough funds.When I asked about taxes, he just told me not to worry, and that they will not be considering the money transferred to me as income but as a forgivable loan. I have never signed any papers regarding this, and do not exactly understand what this even means.Is this legal? How is back-pay taxed? I absolutely want to pay all my taxes, but am extremely worried about this potentially sketchy situation. What are my options?EDIT: Thanks for your advice everyone. I have a lot to think about.Assistant: You would owe taxes on this income. Since they are not withholding taxes as they should, it will be up to you to do that. This would be considered self-employment income, and you would owe about 15 in self-employment taxes, plus whatever income taxes due and that depends on whether this is all your income or not.Human: Thanks. Am I considered unemployed then, even though the majority of my work was performed at their office and I did not use my own equipment?  <response>: You would not be eligible for unemployment payment. 