Page 43 - Virtual Currencies

8:29 - 7-Feb-2023
Page 20 of 43
Fileid: … tions/p525/2022/a/xml/cycle08/source
The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
If part of your workers' compensation Other compensation. Many other amounts services, such as in Example 23, later, you may
! reduces your social security or equiva- you receive as compensation for sickness or in- have to use another form or schedule instead.
CAUTION lent railroad retirement benefits re- jury aren't taxable. These include the following
ceived, that part is considered social security amounts. Example 20. You're a self-employed attor-
(or equivalent railroad retirement) benefits and • Compensatory damages you receive for ney who performs legal services for a client, a
may be taxable. See Pub. 554 and Pub. 915, physical injury or physical sickness, small corporation. The corporation gives you
Social Security and Equivalent Railroad Retire- whether paid in a lump sum or in periodic shares of its stock as payment for your serv-
ment Benefits, for more information. payments. See Court awards and dam- ices. You must include the FMV of the shares in
ages under Other Income, later. your income on Schedule C (Form 1040) in the
Return to work. If you return to work after • Benefits you receive under an accident or year you receive them.
qualifying for workers' compensation, salary health insurance policy on which either you Example 21. You're a self-employed ac-
payments you receive for performing light du- paid the premiums or your employer paid
ties are taxable as wages. the premiums but you had to include them countant. You and a house painter are mem-
in your income. bers of a barter club. Members contact each
Disability pension. If your disability pension is • Disability benefits you receive for loss of other directly and bargain for the value of the
paid under a statute that provides benefits only income or earning capacity as a result of services to be performed. In return for account-
to employees with service-connected disabili- injuries under a no-fault car insurance pol- ing services you provided, the house painter
ties, part of it may be workers' compensation. icy. painted your home. You must report as your in-
That part is exempt from tax. The rest of your • Compensation you receive for permanent come on Schedule C (Form 1040) the FMV of
pension, based on years of service, is taxable loss or loss of use of a part or function of the house painting services you received. The
as pension or annuity income. If you die, the your body, or for your permanent disfigure- house painter must include in income the FMV
part of your survivors' benefit that is a continua- ment. This compensation must be based of the accounting services you provided.
tion of the workers' compensation is exempt only on the injury and not on the period of
from tax. your absence from work. These benefits Example 22. You're self-employed and a
aren't taxable even if your employer pays member of a barter club. The club uses credit
Other Sickness for the accident and health plan that pro- units as a means of exchange. It adds credit
units to your account for goods or services you
vides these benefits.
and Injury Benefits provide to members, which you can use to pur-
Reimbursement for medical care. A reim- chase goods or services offered by other mem-
In addition to disability pensions and annuities, bursement for medical care is generally not tax- bers of the barter club. The club subtracts credit
units from your account when you receive
you may receive other payments for sickness or able. However, it may reduce your medical ex- goods or services from other members. You
injury. pense deduction. If you receive reimbursement
for an expense you deducted in an earlier year, must include in your income the value of the
Railroad sick pay. Payments you receive as see Recoveries, later. credit units that are added to your account,
even though you may not actually receive
sick pay under the Railroad Unemployment In- If you receive an advance reimbursement or
surance Act are taxable and you must include loan for future medical expenses from your em- goods or services from other members until a
later tax year.
them in your income. However, don't include ployer without regard to whether you suffered a
them in your income if they're for an on-the-job personal injury or sickness or incurred medical Example 23. You own a small apartment
injury. expenses, that amount is included in your in-
come, whether or not you incur uninsured medi- building. In return for 6 months rent-free use of
Black lung benefit payments. These pay- cal expenses during the year. an apartment, an artist gives you a work of art
she created. You must report as rental income
ments are similar to workers' compensation and Reimbursements received under your em-
aren't taxable in most cases. ployer's plan for expenses incurred before the on Schedule E (Form 1040) the FMV of the art-
plan was established are included in income. work, and the artist must report as income on
Federal Employees' Compensation Act Amounts you receive under a reimburse- Schedule C (Form 1040) the fair rental value of
(FECA). Payments received under FECA for ment plan that provides for the payment of un- the apartment.
personal injury or sickness, including payments used reimbursement amounts in cash or other
to beneficiaries in case of death, aren't taxable. benefits are included in your income. For de- Form 1099-B from barter exchange. If you
exchanged property or services through a bar-
However, you're taxed on amounts you receive tails, see Pub. 969.
under FECA as continuation of pay for up to 45 ter exchange, Form 1099-B or a similar state-
ment from the barter exchange should be sent
days while a claim is being decided. Report this
income on line 1a of Form 1040 or 1040-SR. Miscellaneous Income to you by February 15, 2023. It should show the
Also, pay for sick leave while a claim is being value of cash, property, services, credits, or
processed is taxable and must be included in This section discusses various types of income. scrip you received from exchanges during
2022. The IRS will also receive a copy of Form
your income as wages. You may have taxable income from certain 1099-B.
If part of the payments you receive un- transactions even if no money changes hands.
! der FECA reduces your social security For example, you may have taxable income if Backup withholding. In most cases, the in-
you lend money at a below-market interest rate
CAUTION or equivalent railroad retirement bene- come you receive from bartering isn't subject to
fits received, that part is considered social se- or have a debt you owe canceled. regular income tax withholding. However,
curity (or equivalent railroad retirement) benefits backup withholding will apply in certain circum-
and may be taxable. See Pub. 554 for more in- Bartering stances to ensure that income tax is collected
formation. on this income.
Bartering is an exchange of property or serv- Under backup withholding, the barter ex-
Qualified Indian health care benefit. For ices. You must include in your income, at the change must withhold, as income tax, 28% of
benefits and coverage provided after March 23, time received, the FMV of property or services the income if:
2010, the value of any qualified Indian health you receive in bartering. If you exchange serv- • You don't give the barter exchange your
care benefit isn't taxable. These benefits in- ices with another person and you both have TIN, or
clude any health service or benefits provided by agreed ahead of time on the value of the serv- • The IRS notifies the barter exchange that
the Indian Health Service, amounts to reim- ices, that value will be accepted as FMV unless you gave it an incorrect TIN.
burse medical care expenses provided by an the value can be shown to be otherwise. If you join a barter exchange, you must certify
Indian tribe, coverage under accident or health Generally, you report this income on Sched- under penalties of perjury that your TIN is cor-
insurance, and any other medical care provided ule C (Form 1040). However, if the barter in- rect and that you aren't subject to backup with-
by an Indian tribe. volves an exchange of something other than holding. If you don't make this certification,

Page 20 Publication 525 (2022)