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77kathm
New Member

I clean at a motel and in return they give me a room to live in at a discounted price, but i still pay. Do i claim taxes still?

 
1 Best answer

Accepted Solutions
Hal_Al
Level 15

I clean at a motel and in return they give me a room to live in at a discounted price, but i still pay. Do i claim taxes still?

Does the motel give you any tax form, like a 1099-Misc, 1099-B or W-2.?

If yes, then it's taxable.

 If not, it's not so clear. In general you have a barter arrangement, and that is usually taxable.  The amount you report as income is the fair market value of the discount. That would be the difference between the lowest rate charged to customers and what you pay.

There are two ways to report it. If you want it to count as Earned Income (wages) so you can get the Earned Income Credit (EIC), enter it as self employment (Business income). But then, you will have to pay social security tax 0n the income.


Other wise, In TurboTax (TT), enter at:

- Federal Taxes tab

 - Wages & Income

Scroll down to:

-Less Common Income

      -Misc Income, 1099-A, 1099-C

       - On the next screen, choose – Bartering income not already reported

It will go on line 21 of form 1040, as "Other Income".

View solution in original post

4 Replies
Hal_Al
Level 15

I clean at a motel and in return they give me a room to live in at a discounted price, but i still pay. Do i claim taxes still?

Does the motel give you any tax form, like a 1099-Misc, 1099-B or W-2.?

If yes, then it's taxable.

 If not, it's not so clear. In general you have a barter arrangement, and that is usually taxable.  The amount you report as income is the fair market value of the discount. That would be the difference between the lowest rate charged to customers and what you pay.

There are two ways to report it. If you want it to count as Earned Income (wages) so you can get the Earned Income Credit (EIC), enter it as self employment (Business income). But then, you will have to pay social security tax 0n the income.


Other wise, In TurboTax (TT), enter at:

- Federal Taxes tab

 - Wages & Income

Scroll down to:

-Less Common Income

      -Misc Income, 1099-A, 1099-C

       - On the next screen, choose – Bartering income not already reported

It will go on line 21 of form 1040, as "Other Income".

View solution in original post

77kathm
New Member

I clean at a motel and in return they give me a room to live in at a discounted price, but i still pay. Do i claim taxes still?

Which way would be best
Hal_Al
Level 15

I clean at a motel and in return they give me a room to live in at a discounted price, but i still pay. Do i claim taxes still?

For most people, calling it self employment is better. The earned Income Credit (EIC) is usually more than the social security tax. If you are claiming a child dependent, the earned income may also result in more Child Tax Credit

But the only way to be sure is run the numbers. The  self employment tax (social security & medicare tax)  will be approx. 14% of the amount. You need to compare that to the EIC you will get if you call it self employment (earned income). Look up your EIC amount(s) in this table: (page 30):  <a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/p596.pdf">https://www.irs.gov/pub/irs-pdf/p596.pdf</a>

The earned income credit is first calculated (actually looked up in a table) on your earned income then it is calculated on your total income (AGI). You get the lesser of the two calculated EIC numbers.

Or you can use this tool to do trial returns: <a rel="nofollow" target="_blank" href="https://turbotax.intuit.com/tax-tools/calculators/taxcaster/?s=1">https://turbotax.intuit.com/tax-to...>
Hal_Al
Level 15

I clean at a motel and in return they give me a room to live in at a discounted price, but i still pay. Do i claim taxes still?

 You are not eligible for the EIC if you are under 25 and have no child dependents. You are not eligible for the EIC if you are 65 or over and have no child dependents.
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