A Taxing Question

[Dean May]

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
>