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.

[CharlieWorks]

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! 

[Bsch4477]

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]

" 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?

[CharlieWorks]

I'm sorry, on my IRS account on their website.

[NCperson · Accepted solution]

@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,

[CharlieWorks]

I live on my Social Security income (not a fat check but I am a man of few needs) so I did all of the labor for free and another friend purchased or reimbursed me for the parts if I purchased them. It was a venture we took on together during Covid just trying to help folks out that couldn’t afford the expense because of all the shut downs. Others contributed as well if there was a tool I needed I didn’t have. I believe it helped us all being able to be a part of doing some good when everything seemed to be going wrong. ☺️👍🏻

[CharlieWorks]

As far as the money being gifted it wasn’t for my labor. It was to either buy a certain tool I needed or for the parts for someone else’s car. I even used the Covid stimulus money (and some of my own) I got to buy an engine analyzer because you just can’t diagnose a car theses days without one. 🥴

There were a few that could afford to pay some (not what the job would have cost by any means) but insisted on giving me something for my efforts just to feel they weren’t taking advantage of my kindness and generosity, that I will report but it wasn’t enough to put me above poverty level on my income even with my Social Security. ☺️

[CharlieWorks]

Thank you for your reply! 😁👍🏻