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tax question of working for reduction in apt rent

Sent to Tax Experts September 19 04:17 PM

Hi,

I am a law-abiding citizen. I'm a 100% Disabled US War Veteran.(yes, a female)

We live in Phoenix, AZ.

My boyfriend is thinking about working a weekend night watchman job a our apt complex for reduced rent. (over $470/month reduction) (like $5678/yr in savings off of his yearly rent total)

I told him it's NOT LEGIT, unless he claims that reduction as income. (like get a ?1099? for working)

He's a newly Millionaire (sold land w/ oil in early 2006) and also a retired US Navy CPO. He's 67, so he collects Social Security.

He knows that there will not be any paper work given to him, stating that he will be working for the apt complex.

My boyfriend says his lawyer thinks that it's great! And according to my boyfriend, his lawyer says he will not have to claim that job as income. (I say, his lawyer is shady based on that answer...and his lawyer also does his taxes too) [I also told my boyfriend, regardless of who does your taxes, you are ultimately responsible for your tax statements.]

I told him, that job is VERY shady...and that I do not think it's legal for the complex to hire you, w/o giving you a 1099. (?or some other tax paper?)

Maybe the apt complex would write it as hiring an independant contractor...so then it would my boyfriend's RESPONSIBILITY to claim his job on his own, right? But, wouldn't my boyfriend need a contractor's licence to do that?

I told him because of his bank interest, etc...exceeds his personal exemption level...he would NEED to claim it as income.

I further tried to explained it as if a teenager went to McDonald's for a weekend job, and McDonald's told him that he could have $5,678/yr of food for a year, to work for 840 hours/yr. And McDonald's doesn't give the teenager any Tax papers, at the end of the year....would that be a legal job?

Because this is a HUGE arguement between us, my boyfriend told me that if I know more about the law than his lawyer does, then I should become a lawyer. (I wouldn't get hired by anyone, because I wouldn't be shady, not to mention my disabilities preventing me to copy w/ stress.)

I know that personally, you can get up to $10,000 as a gift from any one person...but having to work 840 hr/year to get a gift, isn't a gift, right?

Personally, I hate the idea of him working a weekend night watchman job for what works out as being a $6.76/hr reduction off his rent, in a zip code that has one of the highest crime rates in the nation.

Plus, I also hate people illegally cheating the gov't out of tax money.
(His son also works full-time under the table, and I totally disagree w/ that. If his son out lives him, he will become a millionaire without ever paying taxes in 25 years of employment.)

I am willing to leave my boyfriend, if I find out that he legally has to claim the reduction in rent as income, and he still insists itaking the job and not claiming it on his taxes.
I have better standards than to have a millionaire boyfriend, that wants to cheat the gov't out of taxes, even if it's only pennies.

Questions:
1) Would my boyfriend, according to tax laws, need to claim his rent reduction as income?

2) Would the apt complex legally need to give him Tax paper, like 1099, or my boyfriend claim it himself, at the end of the year, like other jobs?

Please answer legally!
Thank you for your time,

 

Optional Information:
phoenix, Arizona

Already Tried:
I have prayed for an honest answer. :-)

Customer (name blocked for privacy)
Status:  Closed   Value: $30
Answer
September 19 4:31 PM (14 minutes and 3 seconds later)
         
ACCEPTEDCheck Mark

You are correct. Your boyfriend and his attorney are not correct, and if his lawyer is actually recommending this, he is acting unethically. This type of income is called barter. In addition to it being income for your boyfriend, the value of services that he provides must be added as rental income to the apartment complex. You can find the reference in Publication 17, from the IRS, page 80. You can view this publication at http://www.irs.gov

1. Yes, his rent reduction should be claimed as income on Schedule C. He will also be responsible for filing a schedule SE and paying self employment taxes for the amount that you mentioned.

2. If his "earnings" (rent reduction) are at least 600 dollars for the tax year, then the apartment complex must issue a 1099MISC to your boyfriend, and file the copy with the IRS by the correct filing deadlines. Here are the instructions for that form: http://www.irs.gov/pub/irs-pdf/i1099msc.pdf



Best of Luck with your situation. If you feel I answered fairly, please hit "ACCEPT". If not, let me know! Feedback and bonuses welcome!    Wendy D. Rieger, Enrolled Agent
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