taxed on value of free site?

[trostberg]

I am new to getting paid since I normally volunteer at national parks.

 

At Yellowstone I do not believe the $300 paid for my site was on my W2. This was WY.

 

In speaking with a KOA for tuture employment they would issue a 1099 and the value of the site with no wage) is taxable (WASHINGTON).

 

This is new to me. Any one else have this experience,

[StarDreamers.us]

No free lunch anywhere. You may want to consider what you do for FREE. We have always avoided the for profit operations. If they are in the business for the money, then they may need to pay you in real money, not an over priced lot.

 

Safe Travels!

[StarlifterFE]

If the company you worked for sent a W-4 or 1099 to the IRS, you are liable to pay taxes, both federal and state. We had the same thing happen to us in Suprise, AZ. I called our accountant who confirmed with the IRS that we had to report the income. No money ever exchanged hands but our hours paid for our site. Some folks will tell you that you don't have to pay taxes on that but I would encourage you to seek professional advice. We have been audited twice and believe me, you don't ever want to go through one of those.

[LFDR3116]

Many volunteer locations DO NOT issue a 1099 for the value of your site. Their job description states that you must live on site to do the job. In 5 years we have never had a 1099 and have volunteered for a city owned nature park, county campground and forestry parks and worked at a private owned park. I understand that this will vary by state and the size of the corporation/company/association you volunteer for. The only thing we have gotten was a W-2 if wages were paid.

[trostberg]

This is the first I have heard of it too and have volunteered for 5 years all in different states.

I will have to go back and see if the value of the site was on my W2 for Yellowstone, I did not think it was but maybe I was wrong.

I believe that required me to live on site. I have asked to live offsite in the past for one KOA job that was near my home but it did not go over very well. I did work for them if I was going to have to pay for a site.

[AvionLover]

It has been a few years since we had to deal with this issue but at that time the "litmus test" that was applied according to the IRS was "does the employer require you to live on site as a condition of employment?" If the answer was "no" you were required to pay taxes on the value of the site. If the Answer was "yes" you were not required to pay taxes on the site.

 

Key words here we Employer, required, & "condition of employment".

 

The bad news is the fact that they are issuing a 1099 pretty much answers that question and you would be hard pressed to prove they required you to live on site, unless you have a written agreement, signed by all parties. With that, you would be covered.

 

Please note: We have not verified this for several years. However, you can do so yourself by walking thru the question on your tax forms and with the publications the IRS puts out. ALSO NOTE many years ago out accountant taught us "Never believe what the IRS tells you over the phone! Look it up for yourself, or pay someone to and then have THEM show you where they found that info". (I used to work with government regs as part of profession so was used to the "catch 22" phrasing).. LOL

 

 

[Kevin H]

Teri - The $300 you paid for your site was probably one reason so Xanterra did not have to deal with 1099s. I guess Xanterra could say you paid $300 and then value the site at $600. That would stink but I guess it could happen. I've not heard of it happening.

 

I know Delaware North charged me $32/week plus electricity. Nothing other than my hourly wages ever showed up on my W2 and no 1099 was issued. Like you, that was Wyoming. I don't think whatever state you are in has any impact on what the the Feds do. There are far more knowledgeable folks on the forum than I, hopefully some will chime in. I'm just sharing how things worked for me the past four seasons in Yellowstone.

 

There is a couple here who camphosted for Xanterra in YNP. I cannot remember who they are but hopefully they will jump in so we can get something "straight from the horse's mouth."

 

This season I will be a Federal Employee in YNP. It will be interesting to see how that works come tax time.

 

I volunteered four winters for Texas State Parks and received a FHU site. I never got any tax paperwork for any of those stints.

 

How much does KOA assess the value of their site?

[AvionLover]

Kevin, I don't about Teri's situation but we were at Petoskey KOA in Michigan this past summer. They valued their site at $600, which they took out of our paycheck. Ironic thing was doing it that way they had to pay the employer's share of the SS on it, and of course we had to pay taxes on it (just enough to create a 3 hour headache!). but that's alright, KARMA WILL GET THEM

[JRP]

Whether employer provided lodging is taxable or tax exempt will vary from location to location depending on the specifics of each situation. By default, the IRS considers employer provided room & board or lodging, a taxable fringe benefit. Whether there is a wage involved or not, is irrelevant. In order to be tax exempt, the lodging must meet all 3 of these conditions:

1)provided on the site of the business

2)provided for the convenience of the employer (there must be a valid business reason for providing the lodging)

3)it must be a requirement of employment (which means if the employer allows others in this same position to live off site, then its not tax exempt for anyone)

 

Its usually #3 that get some businesses fined when they're audited for this

 

IRS Pub 5137 section 12 https://www.irs.gov/pub/irs-pdf/p5137.pdf

 

(these are the federal IRS rules, state rules may be different)

[don&penny]

This is the first I have heard of it too and have volunteered for 5 years all in different states.

I will have to go back and see if the value of the site was on my W2 for Yellowstone, I did not think it was but maybe I was wrong.

I believe that required me to live on site. I have asked to live offsite in the past for one KOA job that was near my home but it did not go over very well. I did work for them if I was going to have to pay for a site.

 

Hi Teri,

 

Your site charge and electricity were deducted from your paycheck BEFORE income tax withholding was calculated and the amount deducted does not show up on your taxable income when working for Xanterra in Yellowstone. Hence, you neither see it nor pay federal income taxes on it (state income tax doesn't matter either way in this case, since you were in Wyoming which has no state income tax).

 

The campground hosts in Yellowstone who work directly for NPS do not get paid, so they get their site and electric free.

 

Don

[Kevin H]

Kevin, I don't about Teri's situation but we were at Petoskey KOA in Michigan this past summer. They valued their site at $600, which they took out of our paycheck. Ironic thing was doing it that way they had to pay the employer's share of the SS on it, and of course we had to pay taxes on it (just enough to create a 3 hour headache!). but that's alright, KARMA WILL GET THEM

 

$600!! Wow! That's certainly something to keep in mind should I ever consider working for them. Thanks for sharing.

[AvionLover]

Jim2, thanks for posting that, I was just getting back on to track it down and you saved me some headaches.

 

Seems like the key words are "in the same position" which, if the agreements and job titles are worded right would certainly help.

 

We are suppose to head into AZ and work at a KOA for a few hours and have contacted them to clarify if this will be an issue there. We were looking for a simple, relaxing place to enjoy the spring and summer and see an area of the country we hadn't seen yet. Having to file a state income tax return on money we never really see, and such a small amount is called a "RPITA" and just might change things. but oh, well, maybe the universe is telling us we're not to be there. We shall see.

 

thanks again for posting that

 

UPDATE on this

 

from IRS PUB 5137" Lodging is excludable from wages of the employee if it is provided:

•  on the employer's business premises;

•  for the employer's convenience; and

•  as a condition of employment."

​So the parenthetical phrase that Jim2 added is actually an interpretation and not a statement by the IRS

[Kirk W]

There are two very different situations here. The volunteer for site positions for government entities, charities, and non-profit organizations and there are work for site only or pan & site at a for profit business that is actually considered to be barter and is taxable income Post #9 is correct but there is a rule that is used in the event that the IRS should examine a return that claims the exemption for being required to live on site. They want to see if there are any employees who do the same jobs that do not live on site. If the answer is yes, the exemption will usually be disallowed.

[trostberg]

So about $600 a month is the value of the KOA site I spoke with. And they issued a 1099 for that amount to previous staff. No wages involved.

The other KOA I am speaking with is that I pay a discounted price of $100 a month and all wages paid. Nothing was said about a 1099 but I will ask about if it comes directly out of your check and if it is taxable.

 

No tax on the money I paid for my site that was deducted from my paycheck at Yellowstone concessionairre. Neither of these are nonprofit

 

So does Amazon tax the value of the campsite. I do not believe they are on site at all facilities and I think many of them bill Amazon directly and you never see a bill or deduction?

 

This was my test year to see if working for a wage was to my benefit or if I should continue to volunteer......

 

From some other places I have posted it sounds like the 1099 is a benefit to the business. Do not know if there is any benefit to the worker.

[Fulltimer51]

At some campgrounds the bookkeeper is the boss. Not all have a clue about this kind of situation. If the job doesnt make you happy dont take it. I mean this in the nicest way. There are to many other places to work where no one even knows what a 1099 is.

[Fulltimer51]

Kevin, I don't about Teri's situation but we were at Petoskey KOA in Michigan this past summer. They valued their site at $600, which they took out of our paycheck. Ironic thing was doing it that way they had to pay the employer's share of the SS on it, and of course we had to pay taxes on it (just enough to create a 3 hour headache!). but that's alright, KARMA WILL GET THEM

 

This year its $100/week. Guess they are getting better.

[Fulltimer51]

One good thing about paying a reduced rate for a site rather than working hours for the site is that there should be no tax problems since you are, in fact, paying for your site. I wonder how much real money, as far as tax due, we are really talking about anyway.

[TCW]

...From some other places I have posted it sounds like the 1099 is a benefit to the business. Do not know if there is any benefit to the worker...

Here are a couple of links to IRS publications discussing the use of a W-2 versus 1099 and the difference between an employee and a contractor.

 

If I were to be payed with a 1099, I would investigate whether I would have to pay selfemployment taxes in addition to the income tax. I would also want to know if I would be covered by workmen's compensation and the employer's liability insurance for any injuries incurred on the job and any incidents that might occur during my employment.

 

Federal agencies and I believe many state, local and other government agencies consider volunteers as employees as far as workmen's compensation and any torts that might result from the volunteer's performance of their duties. There is also the Volunteer Protection Act which provides liability protection for volunteers that meet the law's definition of a Volunteer:

 

"The term volunteer means an individual

performing services for a nonprofit organization or a governmental

entity who does not receive

(1) compensation (other than reasonable reimbursement

or allowance for expenses actually incurred); or

(2) any other thing of value in lieu of compensation,

in excess of $500 per year, and such term includes a volunteer

serving as a director, officer, trustee, or direct service volunteer."

[Kirk W]

From some other places I have posted it sounds like the 1099 is a benefit to the business. Do not know if there is any benefit to the worker.

The choice to consider a worker to be an independent contractor is what determines that a 1099 is to be used and not a W-2. It means that the employer does not have to do withholding, pay SS, supply any benefits, and a host of other employer benefits. It is nearly always done for the benefit of the employer and has no benefit to the worker. If you are a contract employee then you are required to pay all of your SS and income tax on your wages and there are no employer provided benefits. The choice of which category a worker falls into is the decision of the employer and can be complicated. The final decision is based upon IRS pub 15-a with the explanation beginning on page 7. Most employers who call temporary workers "contract workers" and use the 1099 are doing so to keep their expenses and required records down.

 

The volunteer protection act of 1997 makes no mention of income tax status and it has no bearing upon it. There are actually two different issues at play here. The employer issue for a commercial enterprise who wants to claim the "free campsite" or other cost of workers on his income taxes as a deduction, and the issue for the worker as to whether any benefit received is considered to be income and thus is subject to income tax. The issue is discussed at some length on this document from the Nonprofit Risk Management Center and is well worth the time to read. This is based upon the position of the nonprofit organization. When you "volunteer" at a for-profit business, the tax issue gets much more dicey for both the employer and the worker.

 

What is Nominal Compensation?

While there is no clear-cut guidance on what constitutes “nominal compensation” to a volunteer, 29 C.F.R. § 553.106(e) provides that “a fee is not nominal if it is a substitute for compensation or tied to productivity.” In addition, Section 553.106(f) of FLSA regulations provides that “determining whether the expenses, benefits, or fees would preclude an individual from qualifying as a volunteer under the FLSA requires examining the total amount of payments in the context of the economic realities of a particular situation.” DOL’s Wage and Hour Division presumes that fees paid to volunteers are nominal as long as the fee does not exceed twenty percent of what an employer would otherwise pay to hire a full-time employee for the same services. See Wage and Hour Opinion Letters FLSA2006-28 (Aug. 7, 2006) and FLSA2005-51.

[trostberg]

Not going to take a job if I get issued a 1099. I am just glad they mentioned this up front. Don't want to pay takes on $3000 on a 1099 and no pay. I would rather volunteer at a national park if that is the case.

 

I was not sure if this was common and it appears not. I will ask this question in the future when interviewing..

[Pieere]

I would never take employment that issued a 1099 for the value of the site...

[Kevin H]

Not going to take a job if I get issued a 1099. I am just glad they mentioned this up front. Don't want to pay takes on $3000 on a 1099 and no pay. I would rather volunteer at a national park if that is the case.

 

I was not sure if this was common and it appears not. I will ask this question in the future when interviewing..

 

Don't blame you!! And "Thanks!" for bringing this up. I, for one, and I suspect there are many others who would not think to ask if a position reports earnings via W2 or 1099. I certainly will in the future. I agree - 1099 - Nope!

[DuffMan]

If you just trade labor for site - don't provide them your SS# and they won't be able to issue you a 1099 or W2.

[Twotoes]

A requirement that you live onsite is not relevant here. What is happening is that the for profit parks are deducting the value of the site they are giving you from their bottom line. This deduction creates a taxable event. The IRS to allow the employer to claim the deduction demands that the employer 1099 the employee who must then claim the value of the site and offset the employers deduction.

[jjwicklund]

A requirement that you live onsite is not relevant here. What is happening is that the for profit parks are deducting the value of the site they are giving you from their bottom line. This deduction creates a taxable event. The IRS to allow the employer to claim the deduction demands that the employer 1099 the employee who must then claim the value of the site and offset the employers deduction.

Shouldn't an "employee" be issued a W2 and not a 1099? Sounds like the employer is screwing both the employee and the IRS/SS fund.