1 : Was this arrangement a "barter" arrangement and do I need to file taxes for the room / use of the house as a residence? Keep in mind this was also my office.
2 : If I do have to amend my tax returns and disclose any of this as income, do I need to have my former "employer" also agree that the income was paid or that a barter relationship existed?
3 : If he feels that I am wrong, can he challenge me in court?
4 : I don't want to start trouble for anyone here, but I just want to know what my options are. I never realized this could possibly be construed as something I might have to pay tax on.
2 : If I do have to amend my tax returns and disclose any of this as income, do I need to have my former "employer" also agree that the income was paid or that a barter relationship existed?
3 : If he feels that I am wrong, can he challenge me in court?
4 : I don't want to start trouble for anyone here, but I just want to know what my options are. I never realized this could possibly be construed as something I might have to pay tax on.
Answer :
1 : Yes I guess so; as you said,”I was not paying rent any more, and I was also doing work at the office in the morning for which I was not paid cash for.”; The IRS wants to remind TPs that bartering transactions generally have associated tax reporting, accounting and recordkeeping responsibilities. The FMV of property or services received through barter is taxable income.As s self employer, a contractor, NOT an EE, as you can see, you need to file your return as long as the amount on line 29/ 31 is $400 or exceeds $400 on Sch C and also need to pay SECA taxes as long as the amount on line 2/ 3 on Sch SE is also $400 or exceeds $400; ALSO,
If you are filing as a sole proprietor, partner, S corp shareholder, and/or a self-employed individual, you generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return. however, You do not have to pay estimated tax for the current year if you had no tax liability for the prior year ; You were a U.S. citizen or resident for the whole year;Your prior tax year covered a 12 month period
2 : I guess you can do that UNLESS he understands the transaction; you can let him it is a barter transaction between you and him.
If you are filing as a sole proprietor, partner, S corp shareholder, and/or a self-employed individual, you generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return. however, You do not have to pay estimated tax for the current year if you had no tax liability for the prior year ; You were a U.S. citizen or resident for the whole year;Your prior tax year covered a 12 month period
2 : I guess you can do that UNLESS he understands the transaction; you can let him it is a barter transaction between you and him.
3 : Actually not in court but he may contact the IRS for more accurate info in detail/ for sure. Bartering income is considered taxable revenue by the IRS.Anyway he also needs to report his barter income that you didn’t receive from him as you said,” you was also doing work at the office in the morning for which you were not paid cash for.”So fair rental value of the room was equivalent to the cash he had to pay you if you had not used the room for rent free.The cash that he had to pay you is his barter income that he needs to report on his return as taxable income since he didn’t pay you.
4 : No trouble at all; you won't start trouble for anyone here;both of you need to pay tax on your taxable baretering income as mentioned previously.
4 : No trouble at all; you won't start trouble for anyone here;both of you need to pay tax on your taxable baretering income as mentioned previously.
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