# I don't want to give the IRS any money. **URL:** \ **Category:** Factual Questions\ **Created:** [December 28, 2006, 11:00pm UTC](https://boards.straightdope.com/t/i-dont-want-to-give-the-irs-any-money/385921 "2006-12-28T23:00:39Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![randwill](https://avatars.discourse-cdn.com/v4/letter/r/a3d4f5/32.png) [@randwill](https://boards.straightdope.com/u/randwill)\ **Post date:** [December 28, 2006, 11:00pm UTC](https://boards.straightdope.com/t/i-dont-want-to-give-the-irs-any-money/385921/1 "2006-12-28T23:00:39Z")
So let’s say I’m an artist. My art is composed of found objects and things in nature. So I don’t buy any art supplies. I live in a loft above a gallery (all utilities included), the owner of which sells my work. I live in the loft free of charge, because the owner is my best friend and likes me and the fact that he/she sells my work is secondary to the arrangement. I also have a good friend who is a farmer, who likes me so much he gives me food in exchange for me giving him pieces of my work, as he’s also an art collector. So I have no need for money. However, when I was a child I got a Social Security card and worked a little job one summer, so I’m on the I.R.S. radar. One day a bored I.R.S. agent decides to check up on me and see why I haven’t paid any federal income tax in the last 25 years. When I describe my situation does the agent say, “Okay, you’re cool.” or “You’re in a heap of trouble boy.” ---
**Author:** ![Triskadecamus](https://avatars.discourse-cdn.com/v4/letter/t/b19c9b/32.png) [@Triskadecamus](https://boards.straightdope.com/u/Triskadecamus)\ **Post date:** [December 28, 2006, 11:12pm UTC](https://boards.straightdope.com/t/i-dont-want-to-give-the-irs-any-money/385921/2 "2006-12-28T23:12:03Z")
You’re cool. Barter below the level of taxable income, which you situation seems to be is not taxed. You have to earn some huge amount, like three thousand dollars in a year before you are even subject to taxes. Even in that case, you get break with the standard deduction. Now, if you get actual money from anyone, that counts toward the total. If the total goes over the magic number, you have to file, although you probably don’t owe anything. Failure to file is a misdemeanor, but even IRS guys hate spending a week recapturing a thirty cent delinquency. Seven years later, you are home free, unless you actually owed money, in which case they can come in and steal all your assets. Since you have none, that risk is fairly minimal. Even IRS would have to prove fraud to send you to jail. Tris ---
**Author:** ![Opus1](https://avatars.discourse-cdn.com/v4/letter/o/858c86/32.png) [@Opus1](https://boards.straightdope.com/u/Opus1)\ **Post date:** [December 28, 2006, 11:13pm UTC](https://boards.straightdope.com/t/i-dont-want-to-give-the-irs-any-money/385921/3 "2006-12-28T23:13:01Z")
[QUOTE=randwill] I also have a good friend who is a farmer, who likes me so much he gives me food in exchange for me giving him pieces of my work, as he’s also an art collector. [/quote] Barter counts as income. Thus… > [@](#): > > “You’re in a heap of trouble boy.” ---
**Author:** ![Opus1](https://avatars.discourse-cdn.com/v4/letter/o/858c86/32.png) [@Opus1](https://boards.straightdope.com/u/Opus1)\ **Post date:** [December 28, 2006, 11:15pm UTC](https://boards.straightdope.com/t/i-dont-want-to-give-the-irs-any-money/385921/4 "2006-12-28T23:15:16Z")
Tris–OP is describing getting all of his food based on bartering his artwork. I think even for a single guy, you could easily hit the $3k/ yr amount. I’m assuming he’s bartering for clothes and other necessities as well. OP may still be below the threshold for paying taxes, but it’s not a given. ---
**Author:** ![Triskadecamus](https://avatars.discourse-cdn.com/v4/letter/t/b19c9b/32.png) [@Triskadecamus](https://boards.straightdope.com/u/Triskadecamus)\ **Post date:** [December 28, 2006, 11:20pm UTC](https://boards.straightdope.com/t/i-dont-want-to-give-the-irs-any-money/385921/5 "2006-12-28T23:20:23Z")
I would like to point that this post is evidence of at least fifteen dollars in cash assets. Tris ---
**Author:** ![Gfactor](https://avatars.discourse-cdn.com/v4/letter/g/9de053/32.png) [@Gfactor](https://boards.straightdope.com/u/Gfactor)\ **Post date:** [December 28, 2006, 11:20pm UTC](https://boards.straightdope.com/t/i-dont-want-to-give-the-irs-any-money/385921/6 "2006-12-28T23:20:24Z")
I’m not an accountant or a tax lawyer. Here is what the IRS has to say about the subject: > [@](#): > > Topic 420 - Bartering Income > > Bartering occurs when you exchange goods or services without exchanging money. An example of bartering is a plumber doing repair work for a dentist in exchange for dental services. The fair market value of goods and services exchanged must be included in the income of both parties. > > Income from bartering is taxable in the year in which you receive the goods or services. Generally, you report this income on Form 1040, Schedule C (PDF), Profit or Loss from Business. If you failed to report bartering income on returns you have already filed, you should correct this by filing an amended return, Form 1040X (PDF), for each year involved. For information on amended returns, refer to Topic 308. > > A barter exchange is any person or organization with members or clients that contract with each other (or with the barter exchange) to jointly trade or barter property or services. The term does not include arrangements that provide solely for the informal exchange of similar services on a noncommercial basis. > > The Internet has provided a medium for new growth in the bartering exchange industry. This growth prompts the following reminder: Barter exchanges are required to file Form 1099-B for all transactions unless certain exceptions are met. Refer to Barter Exchanges for additional information on this subject. > > If you are in a business or trade, you may deduct any costs you incurred to perform the work that was bartered. If you exchanged property or services through a barter exchange, you should receive a Form 1099-B (PDF), Proceeds from Broker and Barter Exchange Transactions. The Form 1099–B or other statement generally will show the value of any cash, property, services, credits, or scrip you received from the exchange during the year. The IRS will also receive the same information. > > If you receive income from bartering, you may be required to make estimated tax payments. Refer to Topic 355 for additional information. > > Additional examples of bartering, and information on how to report the income, are described in Publication 525, Taxable and Nontaxable Income. [QUOTE=IRS Publication 525] Bartering Bartering is an exchange of property or services. You must include in your income, at the time received, the fair market value of property or services you receive in bartering. If you exchange services with another person and you both have agreed ahead of time as to the value of the services, that value will be accepted as fair market value unless the value can be shown to be otherwise. Generally, you report this income on Schedule C or Schedule C-EZ (Form 1040). However, if the barter involves an exchange of something other than services, such as in Example 4 below, you may have to use another form or schedule instead. Example 1. You are a self-employed attorney who performs legal services for a client, a small corporation. The corporation gives you shares of its stock as payment for your services. You must include the fair market value of the shares in your income on Schedule C or Schedule C-EZ (Form 1040) in the year you receive them. Example 2. You are a self-employed accountant. You and a house painter are members of a barter club. Members get in touch with each other directly and bargain for the value of the services to be performed. In return for accounting services you provided, the house painter painted your home. You must report as your income on Schedule C or Schedule C-EZ (Form 1040) the fair market value of the house painting services you received. The house painter must include in income the fair market value of the accounting services you provided. Example 3. You are self-employed and a member of a barter club. The club uses credit units as a means of exchange. It adds credit units to your account for goods or services you provide to members, which you can use to purchase goods or services offered by other members of the barter club. The club subtracts credit units from your account when you receive goods or services from other members. You must include in your income the value of the credit units that are added to your account, even though you may not actually receive goods or services from other members until a later tax year. Example 4. You own a small apartment building. In return for 6 months rent-free use of an apartment, an artist gives you a work of art she created. You must report as rental income on Schedule E (Form 1040) the fair market value of the artwork, and the artist must report as income on Schedule C or Schedule C-EZ (Form 1040) the fair rental value of the apartment. Form 1099-B from barter exchange. If you exchanged property or services through a barter exchange, Form 1099-B, Proceeds from Broker and Barter Exchange Transactions, or a similar statement from the barter exchange should be sent to you by January 31, 2007. It should show the value of cash, property, services, credits, or scrip you received from exchanges during 2006. The IRS also will receive a copy of Form 1099-B. Backup withholding. The income you receive from bartering generally is not subject to regular income tax withholding. However, backup withholding will apply in certain circumstances to ensure that income tax is collected on this income. Under backup withholding, the barter exchange must withhold, as income tax, 28% of the income if: ``` * You do not give the barter exchange your taxpayer identification number (generally a social security number or an employer identification number), or * The IRS notifies the barter exchange that you gave it an incorrect identification number. ``` If you join a barter exchange, you must certify under penalties of perjury that your taxpayer identification number is correct and that you are not subject to backup withholding. If you do not make this certification, backup withholding may begin immediately. The barter exchange will give you a Form W-9, Request for Taxpayer Identification Number and Certification, or a similar form, for you to make this certification. The barter exchange will withhold tax only up to the amount of any cash paid to you or deposited in your account and any scrip or credit issued to you (and converted to cash). [/QUOTE] ---
**Author:** ![Triskadecamus](https://avatars.discourse-cdn.com/v4/letter/t/b19c9b/32.png) [@Triskadecamus](https://boards.straightdope.com/u/Triskadecamus)\ **Post date:** [December 28, 2006, 11:24pm UTC](https://boards.straightdope.com/t/i-dont-want-to-give-the-irs-any-money/385921/7 "2006-12-28T23:24:01Z")
Opus, casual exchange of favors, such as “I let him live in my loft, cause he is sooooo cool, and anyway, he’s my best friend.” don’t rise to the level of income, since the exchange is not legally conditional. Bums in the street get meals delivered by charitable organizations. Every time I get a meal delivered it costs me twenty bucks. That doesn’t make it twenty a day in income for the bum. Now, if the exchange is a formalized agreement, it is income. I suppose the farmer in the dell might be making a true barter exchange, if there is some consideration of art for food, each time. Tris ---
**Author:** ![Gfactor](https://avatars.discourse-cdn.com/v4/letter/g/9de053/32.png) [@Gfactor](https://boards.straightdope.com/u/Gfactor)\ **Post date:** [December 28, 2006, 11:37pm UTC](https://boards.straightdope.com/t/i-dont-want-to-give-the-irs-any-money/385921/8 "2006-12-28T23:37:34Z")
Links: > **[Topic No. 420, Bartering Income | Internal Revenue Service](https://www.irs.gov/taxtopics/tc420)** > > Bartering is the exchange of goods or services. A barter exchange is an organization whose members contract with each other (or with the barter exchange) to exchange property or services. The term "barter exchange" doesn't include arrangements that... > **[Publication 525 (2022), Taxable and Nontaxable Income | Internal Revenue Service](https://www.irs.gov/publications/p525)** > > Publication 525 - Introductory Material Future Developments What's New Reminders ---
**Author:** ![Bongmaster](https://avatars.discourse-cdn.com/v4/letter/b/6a8cbe/32.png) [@Bongmaster](https://boards.straightdope.com/u/Bongmaster)\ **Post date:** [December 29, 2006, 3:09pm UTC](https://boards.straightdope.com/t/i-dont-want-to-give-the-irs-any-money/385921/9 "2006-12-29T15:09:55Z")
hehe…topic 420. Couldn’t help myself… ---
**Author:** ![Sapo](https://avatars.discourse-cdn.com/v4/letter/s/ec9cab/32.png) [@Sapo](https://boards.straightdope.com/u/Sapo)\ **Post date:** [December 29, 2006, 3:13pm UTC](https://boards.straightdope.com/t/i-dont-want-to-give-the-irs-any-money/385921/10 "2006-12-29T15:13:38Z")
**randwill** , how do you replace worn shoes or buy toothpaste? ---
**Author:** ![MrSquishy](https://avatars.discourse-cdn.com/v4/letter/m/b9e5f3/32.png) [@MrSquishy](https://boards.straightdope.com/u/MrSquishy)\ **Post date:** [December 29, 2006, 5:01pm UTC](https://boards.straightdope.com/t/i-dont-want-to-give-the-irs-any-money/385921/11 "2006-12-29T17:01:05Z")
[QUOTE=Bongmaster] hehe…topic 420. Couldn’t help myself… [/QUOTE] Is it somewhat appropriate that topic 420 relates to bartering? :dubious: ---
**Author:** ![pravnik](https://avatars.discourse-cdn.com/v4/letter/p/8edcca/32.png) [@pravnik](https://boards.straightdope.com/u/pravnik)\ **Post date:** [December 29, 2006, 5:22pm UTC](https://boards.straightdope.com/t/i-dont-want-to-give-the-irs-any-money/385921/12 "2006-12-29T17:22:02Z")
I have nothing to add except **GFactor’s** sig line is friggin’ hilarious and I’m thinking seriously about stealing it. 😃 ---
**Author:** ![Gfactor](https://avatars.discourse-cdn.com/v4/letter/g/9de053/32.png) [@Gfactor](https://boards.straightdope.com/u/Gfactor)\ **Post date:** [December 29, 2006, 5:40pm UTC](https://boards.straightdope.com/t/i-dont-want-to-give-the-irs-any-money/385921/13 "2006-12-29T17:40:22Z")
[QUOTE=pravnik] I have nothing to add except **GFactor’s** sig line is friggin’ hilarious and I’m thinking seriously about stealing it. 😃 [/QUOTE] Help yourself. It’s how I sign my opinion letters these days, too. 😉 ---
**Author:** ![SnakesCatLady](https://avatars.discourse-cdn.com/v4/letter/s/4af34b/32.png) [@SnakesCatLady](https://boards.straightdope.com/u/SnakesCatLady)\ **Post date:** [December 29, 2006, 6:03pm UTC](https://boards.straightdope.com/t/i-dont-want-to-give-the-irs-any-money/385921/14 "2006-12-29T18:03:20Z")
[QUOTE=Triskadecamus] I would like to point that this post is evidence of at least fifteen dollars in cash assets. Tris [/QUOTE] Not necessarily - the membership could have been paid for by another Doper. It has happened before. ---
**Author:** ![zoid](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/zoid/32/336_2.png) [@zoid](https://boards.straightdope.com/u/zoid)\ **Post date:** [December 29, 2006, 6:08pm UTC](https://boards.straightdope.com/t/i-dont-want-to-give-the-irs-any-money/385921/15 "2006-12-29T18:08:15Z")
[QUOTE=MrSquishy] Is it somewhat appropriate that topic 420 relates to bartering? :dubious: [/QUOTE] Hint: Look at the name of the user who posted that. [try this](http://en.wikipedia.org/wiki/420_%28cannabis_culture%29) ---
**Author:** ![mlees](https://avatars.discourse-cdn.com/v4/letter/m/ba8739/32.png) [@mlees](https://boards.straightdope.com/u/mlees)\ **Post date:** [December 29, 2006, 6:12pm UTC](https://boards.straightdope.com/t/i-dont-want-to-give-the-irs-any-money/385921/16 "2006-12-29T18:12:20Z")
[QUOTE=zoid] Hint: Look at the name of the user who posted that. [/QUOTE] Hehe. So, is there a bartering culture in the pot smoking community? “Ass, gas, or grass. Nobody rides for free.”? ---
**Author:** ![Mr.Slant](https://avatars.discourse-cdn.com/v4/letter/m/c57346/32.png) [@Mr.Slant](https://boards.straightdope.com/u/Mr.Slant)\ **Post date:** [December 29, 2006, 6:51pm UTC](https://boards.straightdope.com/t/i-dont-want-to-give-the-irs-any-money/385921/17 "2006-12-29T18:51:38Z")
If only the OP’s example could marry both the landlord and the farmer, she/he would be set. ---
**Author:** ![mlees](https://avatars.discourse-cdn.com/v4/letter/m/ba8739/32.png) [@mlees](https://boards.straightdope.com/u/mlees)\ **Post date:** [December 29, 2006, 6:59pm UTC](https://boards.straightdope.com/t/i-dont-want-to-give-the-irs-any-money/385921/18 "2006-12-29T18:59:32Z")
Judging from what others have linked, the rent free situation probably does not have to be reported (as long as your being allowed to live there because your a friend). If you stopped giving your buddy/landlord art pieces to sell, would he/she kick you out? If so, then that _would_ be an exchange (barter) of goods and services as defined in Gfactor’s links. Definately, the exchange of art for food seems to be required as reportable. (For both parties.) _obligatory I am not a lawyer/tax agent disclaimer_ ---
**Author:** ![Mr.Slant](https://avatars.discourse-cdn.com/v4/letter/m/c57346/32.png) [@Mr.Slant](https://boards.straightdope.com/u/Mr.Slant)\ **Post date:** [December 29, 2006, 7:35pm UTC](https://boards.straightdope.com/t/i-dont-want-to-give-the-irs-any-money/385921/19 "2006-12-29T19:35:19Z")
[QUOTE=mlees] Judging from what others have linked, the rent free situation probably does not have to be reported (as long as your being allowed to live there because your a friend). SNIP [/QUOTE] I suppose the free rent would probably fall under gifts, so the first $10K wouldn’t be taxable in any case. While I suppose in some places a spare bedroom would cost more than $835, anywhere with nearby farmers wouldn’t have those kind of housing prices. ---
**Author:** ![Bosda\_Di\_Chi\_of\_Tricor](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bosda_di_chi_of_tricor/32/16845_2.png) [@Bosda\_Di\_Chi\_of\_Tricor](https://boards.straightdope.com/u/Bosda_Di_Chi_of_Tricor)\ **Post date:** [December 29, 2006, 10:40pm UTC](https://boards.straightdope.com/t/i-dont-want-to-give-the-irs-any-money/385921/20 "2006-12-29T22:40:53Z")
[QUOTE=randwill] I don’t want to give the IRS any money. [/QUOTE] Move to France. You’ll never have to pay the IRS another nickel. Just give it to the French, instead. [Next page](https://boards.straightdope.com/t/i-dont-want-to-give-the-irs-any-money/385921.md?page=2)