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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 14860
Experience:  15years with H & R Block. Divisional leader, Instructor
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I worked for a company as a free lancer in 2016 and earned

Customer Question

I worked for a company as a free lancer in 2016 and earned $7000. I was never paid due to the company financial problems. Is the amount i wasnt paid tax deductible?
Submitted: 3 months ago.
Category: Tax
Expert:  Robin D. replied 3 months ago.

Hello, I'm Robin. Welcome to JustAnswer. I'm reviewing your question now and typing up my reply. I'll post that in just a few moments.

Expert:  Robin D. replied 3 months ago.

It may seem like this situation would fall under a bad debt and be deductible.

But if you're a cash method taxpayer (most individuals are), you generally can't take a bad debt deduction for unpaid salaries, wages, rents, fees, interests, dividends, and similar items.

For a bad debt, you must show that at the time of the transaction you intended to make a loan and not a gift. If you lend money to a relative or friend with the understanding the relative or friend may not repay it, you must consider it as a gift and not as a loan.

You would not be allowed to deduct the amount they owe you for the work you performed.

Please let me know if you need clarification. If you do not then a positive 5 star rating is appreciated so I get credit for the response. (look for the STARS or SMILEY FACES)

Expert:  Robin D. replied 3 months ago.

Hello, I am checking back to see if you posted a request for clarification.

Please let me know.

Expert:  Robin D. replied 3 months ago.

I am still hoping to hear back from you.