Implications of paying under the table

[Account Closed]

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?