| Ethan | email | Jul 2 2015, 03:13 PM |
| How can I account for a tenant that paid some rent with work done for credit. For example, Tenant mows the lawn. The rent is $690. The value of mowing is $30. He pays $660 in full. I want to be able to show that he has paid the rent in full and record the credit. Thanks in advance. I'm just starting to get my feet wet here and am enjoying the program. | |
| Stephane Grenier | email | Jul 2 2015, 04:36 PM |
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Hi Ethan, In this case what you will want to do is create one Accounting Entry for the $30 payment to the tenant for the mowing work done, and then you will basically charge the tenant their full rent of $690. You need to do this because that's how you need to report it for tax purposes. If you deduct the rent and do not include the payment for the work then you would be breaking the law in terms of taxes. Barter exchanges still mean you have to pay taxes on the fair market value of the barter exchanged: http://www.irs.gov/taxtopics/tc420.html To give you an analogy, if you work in a restaurant you still have to pay for your meal, even if it's at cost. The restaurant doesn't say you made say $5 less in salary, they will give you your full salary and then either charge you when you get the meal or deduct the value of your meal from your paycheck as an additional line item, it's not directly removed from your salary for legal reasons. The same is true for work done in barter by a tenant. That being said we do recommend you consult your tax accounting for details on how exactly you should record this for accounting purposes. Assuming he recommends the same as the above IRS page, then you will need to enter two Accounting Entries as I described above. Regards, Stephan Grenier Founder LandlordMax Software Inc. http://www.LandlordMax.com http://www.FollowSteph.com |
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