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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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Over the course of 10 years I and my wife have helped where

Customer Question

Over the course of 10 years I and my wife have helped where ever we were needed using our car and work consited of raking pine needles around camp, ground cleaning bath rooms, measuring lots that were going to be sold etc. in a camp ground which is a nonprofit mutual benefit corp under CA. law You just pay dues each year and you have exclusive use of your camp site, until you sell it. I was offered barter which was sometimes free dues ( $ 794.00 ) or not being sent the bill for my propane use which was 7 gallon's per tank fill up about $ 21.00 and the fee waived of $ 30.00 for the use of my golf cart which I used to get around the 543 sites to perform the many chores. I was told that this was how they compensated the people for their work as not many wanted to perform the task's asked. Is this legal as I am 70 year's old and am on SS Retirement as is my wife to taqke the barter instead of pay.
Submitted: 5 years ago.
Category: Tax
Expert:  Lev replied 5 years ago.

Yes - that is absolutely legal assuming that both parties agree to be compensated with free benefits instead of the money.

 

You generally must include the value of benefits in your gross income. The benefits are subject to income ans self-employment tax (if you are not an employee).

In general, the amount that you must include is the amount by which the fair market value of the benefits is more than the sum of what the employee paid for it plus any amount that the law excludes. You must determine the value of benefits no later than January 31 of the next year.

If you have any expenses when you performed your work - you may deduct these expenses.

 

Let me know if you need any help.

Customer: replied 5 years ago.
Does this mean that if the value of the work performed is more that the amount received in barter goods and services I need not file anything as I would have lost money in the transaction
Expert:  Lev replied 5 years ago.

I am not sure how would you determine the value of the work you performed and what would be the purposes of that...

 

but for tax purposes that would not matter - the matter is the monetary value of the compensation you received - that should be included into your income.

 

For deduction purposes - you need to determine your actual expenses - for instance - if you purchased some tools, supplies, etc, business use of your golf cart, etc.

 

Let me know if you need any help.

Customer: replied 5 years ago.
Lev: I have not claimed anything or reported anything as I percieved that I actually lost monetary value as I was baseing the work done on the currant wage scale, and I often worked many more hours than was reported to the association and you said they agreed and offered me the exchange which I thought was fair. To make it simple I did not claim any amount on my income and I figured that if any tax would be owed the treasurer of the association would let me know and withhold the proper amount as they were in charge.
Expert:  Lev replied 5 years ago.

If you are an employee - you should be paid at least minimum wages (based on corresponding value of benefits you received).

However if you are not an employee, but a contractor - the minimum wages rule would not applied. In this case - if your actual compensation - based on the time spent - is less than a minimum wages - that is what you agree for. You may think about that as a loss of your time - but for tax purposes - that is not a loss.

 

According to the IRS - that is your responsibility to report any income and determine your tax liability.

If the IRS find out about your income - they might assess additional taxes and penalties and interest if you owe taxes.

 

That is not the association's liability to determine your taxes. If the IRS gets involved - that would be between you and the IRS.

I suggest to keep a good record of your related expenses - just in case - that would reduce your taxable income.

 

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