Everyone has a skill they can share. That’s the theory behind the new OurGoods trade school in New York City, a space where artists and performers share each other’s abilities and help each other finish projects.
OurGoods certainly isn’t the only trading system to spring up in the recession. A pub in England is allowing patrons to trade their skills for their drinks. The BBC reports:
Some drinkers have also volunteered to wash-up or decorate the pub.
Landlords Matthew Walsh and David Hurst said it was a way for independent pubs to compete with special offers at larger chain bars.
Of course, the barter system is hardly a new thing. In fact it’s the oldest thing on the books. NOVA’s History of Money program reported that bartering may even predate people:
Some would even argue that it’s not purely a human activity; plants and animals have been bartering—in symbiotic relationships—for millions of years.
Going back not quite THAT far, a 1998 PBS NewsHour piece on teachers in a remote area of Russia reminds us that when things are really bad, like in the early years following the fall of the Soviet Union, people tend to automatically switch to a trade-based system to get the things they need – even education.
The local government has started paying its wage arrears through barter. It now lets teachers go to local stores choose the products they need and deduct them from their salaries.
All this trading may seem like it’s under the table, but legally do you still owe taxes if you barter for something? The personal finance blog WalletPop says yes.
No money actually changes hands, so it’s almost as if the transaction didn’t happen, right? Not exactly. The fair market value of goods and services that you receive in exchange for goods or services you provide must be included as income on your tax return even though you don’t receive payment in a traditional way.
Think of barter just like cash: If it would be taxable if paid in cash, it’s taxable if paid in goods or services. If you receive value for goods or services that would normally be taxable to you personally but not as part of a trade or business (such as babysitting income), report it as “other income” on line 21 of your form 1040. If the exchange was part of your trade or business, report the transaction, including income and expenses, on a Schedule C on your form 1040.