Of course the person giving the tip already paid tax on that $200. If he is in the 40% bracket (not unlikely for a Steinway owner) he actually had to earn $333 to give Alan the tip, of which Alan will only get around $140 if he pays all the taxes (depending on what bracket he is in). In other words, Alan ends up with way less than half of what his client had to earn to give the tip. The Mafia could take lessons from this kind of protection racket. But I don't think they are that greedy. Dean Dean May cell 812.239.3359 PianoRebuilders.com 812.235.5272 Terre Haute IN 47802 -----Original Message----- From: pianotech-bounces at ptg.org [mailto:pianotech-bounces at ptg.org] On Behalf Of John Formsma Sent: Friday, August 03, 2007 10:58 PM To: tune4u at earthlink.net; Pianotech List Subject: Re: A Taxing Question Alan, Gifts are not taxable. HOWEVER! <G>...I do think what you received is really a tip. It was given as appreciation for good service. And I think the box on the tax return says something like wages and tips. I'd ask your accountant. Now, if you were to send me the $200, it would not be taxable because it would be a gift from you to me...totally unrelated to business. I would write you a thank-you note if you do that. ;-) It would, of course, go to a great charity...the John Needmore Fund. JF On 8/3/07, Alan Barnard <tune4u at earthlink.net> wrote: > > > > Tuned a Steinway M today that did belong to one customer, now belongs to > another, who has become a good friend over the years. I had been on the > lookout for the right piano for this gentleman for a couple of years and > introduced the two people. > > > > After tuning it, he wrote me a check and said "I'm adding $200 to this in > appreciation for finding me this great piano." > > > > "Wow," says I, "Thanks". It was a total surprise because I had not asked for > or expected any finders or sellers fees and really didn't do much more than > make a couple of phone calls. > > > > Question: Is this $200 a gift, or is it a "fee" that I have to report as > business income for taxes? > > > > Seems like a grey area to me. > > > > Alan Barnard > Salem, MO >
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