Any income that is the result of your business activities. For inspectors, this would mostly be from inspection fees.
LOL.
I’m sure that Nick fears a frivolous lawsuit from dishonest lead brokers even less than I do.
Even if he doesn’t, I think my question is broad enough to where he can respond without fear of any red headed retaliation.
Generally, I agree. According to the IRS, Publication 334, “You must report on your tax return all income you receive from your business unless it is excluded by law. In most cases, your business income will be in the form of cash, checks, and credit card charges. But business income can be in other forms, such as property or services.”
Would you agree with this?
While you are formulating your neutral response to that question … I’ll pose my next question.
The IRS says that one is considered a “Direct Seller” when “Your services are performed under a written contract between you and the person for whom you perform the services, and the contract provides that you will not be treated as an employee for federal tax purposes.”
They go on to say that “You must report all income you receive as a direct seller”.
If a home inspector has a contract with a third party who is not a home buyer and his contract “compensates” him as an “independent contractor” for certain services that he performs for the third party, he would report that compensation to the IRS, IMO.
What are your thoughts?
Well, Dan … since Nick started the conversation (and this thread) I am certain that he also obtained the permission from any dubious vendor who may be offended by it, first. He might not have total control over the message board anymore, but he still has some authority left. He may need to coordinate his response, but he’ll provide one.
Well, Dan … since Nick started the conversation (and this thread) I am certain that he also obtained the permission from any dubious vendor who may be offended by it, first. He might not have total control over the message board anymore, but he still has some authority left. He may need to research … and then coordinate … his response, but he’ll provide one.
Well, Dan … since Nick started the conversation (and this thread) I am certain that he also obtained the permission from any dubious vendor who may be offended by it, first. He might not have total control over the message board anymore, but he still has some authority left. He may need to research … and then coordinate … his response, but he’ll provide one if he can. This is a pretty gray area.
In my opinion, this is something that every home inspector who is currently contracted to receive discounts, cash or services from anyone they are contracted with to provide anything to and receive anything from should consult with their own lawyer, CPA or tax consultant. Message board assurances and private emails will not help anyone during a tax audit.
One thing is certain for me … the more threats I get for asking the question, the more I feel it needs to be asked — and answered by professionals. I think others feel the same way.
Well, Dan … since Nick started the conversation (and this thread) I am certain that he also obtained the permission from any dubious vendor who may be offended by it, first. He might not have total control over the message board anymore, but he still has some authority left. He may need to research … and then coordinate … his response, but he’ll provide one if he can. This is a pretty gray area.
In my opinion, this is something that every home inspector who is currently contracted to receive discounts, cash or services from anyone they are contracted with to provide anything to and receive anything from should consult with their own lawyer, CPA or tax consultant. Message board assurances and private emails will not help anyone during a tax audit.
One thing is certain for me … the more threats I get for asking the question, the more I feel it needs to be asked — and answered by professionals. I think others feel the same way.
It depends. If the compensation goes back into the business, I would say no. For example, you and I trading advertising space (my company gets a free ad on your site and your company gets a free ad on my site) would not be a taxable event. The reason is that the profit those ads generate will be eventually taxed in the annual returns. However, if the compensation is something personal, I would say yes. For example, if I paid for your inspection services with a new bicycle, the receipt of the bicycle would be a taxable event to you personally.
In matters concerning bikes and advertising, they would both be taxable but at different rates. I agree.
All business income is taxable unless excluded by law. Where one business contracts with another to provide cash or service in return for something … unless excluded by law, that exchange of cash or service that is received is likely to be taxable … just like bikes and advertising. I see why it would take a lawyer or a CPA to be sure to stay out of trouble with this one.
No. The receipt of the advertising isn’t a taxable event because the net profit the ad generates is already being (or soon will be) taxed.
If I ship you all the printer ink your business can use for free, receiving that free printer ink isn’t a taxable event to you (even if you bartered for it), because the money you save by not having to buy ink is net profit (unless otherwise spent) and taxed there.
In matters concerning bikes and advertising, they would both be taxable but at different rates. I agree.
All business income is taxable unless excluded by law. Where one business contracts with another to provide cash or service in return for something … unless excluded by law, that exchange of cash or service that is received is likely to be taxable … just like bikes and advertising. I see why it would take a lawyer or a CPA to be sure to stay out of trouble with this one.
[Sorry for moving my post.]
If I contracted with you … as an independent contractor … and by our agreement, for every widget I provided you, you would agree to send me a gallon of printer ink … I would pay taxes on the value of that printer ink as business income, would I not?
It’s taxed, but not upon receiving the free goods, but at the end of the year on the net profits that were increased by not having to pay for the goods. Does that make sense?
No. Because you are already going to pay taxes on the additional net profits you end up with by not having to pay for ink. Make sense?
The question was not “when” it was taxable, but yes … I understand.
Business income must be reported unless excluded by law. Printer ink is not excluded by law, so it would be reported as taxable income. At what rate and when it was paid would require additional determination. I understand.
I can see exactly why any business man who is contracted as an independent contractor to receive anything in exchange for something else should seek advice from his attorney or CPA before considering that he need not report what he receives as business income.
Thanks.
The question was not “when” it was taxable, but yes … I understand.
Business income must be reported unless excluded by law. Printer ink is not excluded by law, so it would be reported as taxable income. At what rate and when it was paid would require additional determination. I understand.
I can see exactly why any business man who is contracted as an independent contractor to receive anything in exchange for something else should seek advice from his attorney or CPA before considering that he need not report what he receives as business income. I’m sure you will agree with me.
Thanks.
No. The printer ink is not taxable income. The money you save by not having to buy printer ink (unless otherwise spent on something else deductible) is income. You pay tax on net profits, not on goods that create those net profits.
Thanks for the very limited perspective on the taxation of printer ink. If, instead of printer ink the inspector was receiving cash or services as a result of his contractual agreement to provide widgets, it seems that it would be more clearly taxable … but he should probably still seek a professional opinion.
Business income must be reported unless excluded by law.
I can see exactly why any business man who is contracted as an independent contractor to receive anything in exchange for something else should seek advice from his attorney or CPA before considering that he need not report what he receives as business income. I’m sure you will agree with me.
Thanks.
Thanks for the very limited perspective on the taxation of printer ink. If, instead of printer ink, the inspector was receiving cash or services as a result of his contractual agreement to provide widgets, it seems that it would be more clearly taxable … but he should probably still seek a professional opinion.
Business income must be reported unless excluded by law.
I can see exactly why any business man who is contracted as an independent contractor to receive anything in exchange for something else should seek advice from his attorney or CPA before considering that he need not report what he receives as business income. I’m sure you will agree with me.
Thanks.