I did a lot of free work for people in need but the people paid me back for the parts or someone else gave me the money to get them... now it looks like I made a lot of money from the deposits on my bank statement but it wasn't income.

Forum|Forum|3 years ago
November 17, 2022
1 reply
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I did a lot of free car repairs for people in need from 2020-2022 (I'm retired) but the people paid me back for the parts or someone else gave me the money to get them... now it looks like I made a lot of money from the deposits on my bank statement but it wasn't income. How can I explain this to the IRS or on my 2020-2022 tax returns? I have receipts for the parts and some tools that friends gave me money to purchase to help others and I didn't file because I live below the required amount to file (I live on my SS and it's minimal) but that makes it look like I made a lot more but I didn't. I saw on my account that they were asking why I didn't file so I went and pulled the deposits from my bank statements and about had a heart attack! The money I had received was either gifted or to pay for parts for others but I have no idea how to explain that on a tax return. I would be very thankful if some could give me some direction. Thanks in advance!

Best answer by NCperson

@Bsch4477 @CharlieWorks - maybe I didn't understand what was written

if people are giving you money so you could buy parts that were to go into their cars, I agree, there is nothing to report on taxes. One could argue the money received was income but the money spent was expenses and it nets to zero in any event. You were doing a friend a favor by buying the parts for them.

But if people were giving you money for doing the work (The labor aspect of the work), then that is taxable income even if paid in cash. You earned the money by doing work for someone else. That doesn't appear to be a gift.

Whether the IRS received a 1099 or not doesn't absolve the taxpayer from reporting it and paying any tax that was due,

Bsch4477

Level 15

The income you described is not taxed and doesn’t have to be reported. If you did not receive documentation such as a 1099 the IRS would have no knowledge of that income.

xmasbaby0

Level 15

" I saw on my account that they were asking why I didn't file s...."

You saw on what account that who is asking why you did not file?

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**