Funny, not so funny how the infernal revenuers look at it though. There is a proper form on which to report gifts to the IRS and calculate the tax for them. The IRS might prefer you treat it as a commission for their tax advantage. Getting a pugnacious accountant that is qualified to represent individuals in audits is worth it, their fee does come out of what you pay the IRS. I pay a lot less total now then I did before I got one. It may also be considered a sales commission and subject to a state's Sales & Use Tax. Here in this portion of Texas the rate is 8.25%. To back out the tax you would divide 200 by 1.0825 and come up with $184.76 as the pre-tax amount with $15.24 as the Sales & Use Tax portion for a total the original $200.00. [Ie add the per-centage rate as a decimal to 1 (1+0.0825=1.0825) and divide the original by that sum to obtain the pre-tax portion.] In Texas you have to charge Sales & Use Tax on your tuning revenue. You can back it out like above or tack it on. I raised my rates by switching from backing it out to tacking it on a year ago after looking at my total contribution to the State for the previous year and looking at my fuel expenditures. A calculator is a time saving tool in my toolkit now. Andrew Anderson, Artisan Piano At 05:25 PM 8/3/2007, you 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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