Implications of paying under the table
I need to do several renovations on some rental units and am evaluating two options. 1) Hire licensed contractors and pay $30k. 2) Hire an unlicensed contractor who has an excellent reputation and good references. Pay $20k but he takes it under the table. He will provide receipts for materials but not labor.
Thus, when it comes to tax return season, I plan to report and deduct the material expenses but not the labor. Am I doing anything illegal here?