<prompt> Human: My previous employer had been paying me in personal checks from his temp agency, and I dont believe there was any taxes being taken out. When I asked him to setup direct deposit, he said I would make more money without it. I added up my hours for one of my checks and it appeared that I was receiving the full amount for the time I worked. Is this something I should report? If it is reported would I have to pay back taxes for the time I was working there? I only worked there for two months, but it sucks that I most likely wont receive a W-2.  <response>: If you fail to report it, you can end up owing back taxes to the IRS, including penalties, fines, and even jail time depending on how long it goesYou can protect yourself by setting some of the money aside about 16 of your paycheck to be safe and reporting all of your earnings to the IRS. You will need to talk to a real tax professional, and not self-file, however.Your boss is likely to get in trouble for this, and he is counting on you to not report your earnings.As for why he is doing this, there are additional taxes he has to send in to do it right. If he pays you 8 an hour, he probably actually spends like 9 overall. So he saves money, and you get more money, and as long as no one opens their mouth, everyone is happy. 