Is it taxable if someone return me money?
The $10,000 is not taxable to either of you, but the $500 is taxable income to you - and a deductible business expense for your friend.
"Taxability depends on residential status when the $ were earned. If it was earned during his status as ""Non-Resident"" in India, then its tax free. If the money was earned when his tax status was resident in India, then its taxable as per the tax bracket. Edit: Taxability does not depend on whether to transfer the money into India, or keep it out of India or bring it as Cash or Electronically. It only depends on NRI status. Of course transferring the funds into NRE makes the paperwork simpler in case there is a scrutiny." "I had experience working for a company that manufactures stuff and giving products to the employees. The condition was to stay employed for a year after the gift for the company to cover its cost (I think they imputed the tax), otherwise they'd add the cost to the last paycheck (which they did when I left). But they were straight-forward about it and I signed a paper acknowledging it. However, in your case you didn't get a product (that you could return when leaving if you didn't want to pay), but rather a service. The ""winning"" trip was definitely supposed to be reported as income to you last year. Is it okay for them to treat me differently than the others for tax purposes? Of course not. But it may be that some strings were attached to the winning of the incentive trip (for example, you're required to stay employed for X time for the company to cover the expense). See my example above. Maybe it was buried somewhere in small letters. Can they do this a year after the trip was won and redeemed? As I said - in this case this sounds shady. Since it is a service which you cannot return - you should have been taxed on it when receiving it. Would the IRS want to know about this fuzzy business trip practice? How would I report it?  Here's how you can let them know. Besides now understanding the new level of slime from my former   employer is there anything else I should be worried about? Could they   do something like this every year just to be annoying? No, once they issued the last paycheck - you're done with them. They cannot issue you more paychecks after you're no longer an employee. In most US States, you are supposed to receive the last paycheck on your last day of work, or in very close proximity (matter of weeks at most)." There's nothing wrong with your reasoning except that you expect the tax laws to make perfect sense. More often than not they don't. I suggest getting in touch with a professional tax preparer (preferably with a CPA or EA designation), who will be able to understand the issue, including the relevant portions of the French-US tax treaty, and explain it to you. You will probably also need to do some reporting in France, so get a professional advice from a French tax professional as well. So, in my tax return, can I say that I had no US revenue at all during   this whole year? I doubt it. "Now today I received another refund in the same amount for the same property. What can legally happen if I cash it? Legally the money is not yours. The best course for you is to return the check via certified mail, notifying them that you were already paid. Just because someone made an error, does not mean the money belongs to you. If you don't and rather cash the check; sooner or later depending on the amount, it would be found out by the company as part of reconciliation/audit; they will/can then demand the same back from you.  It is up to the company to decide if simply refund is sufficient; or refund plus some interest or start a legal proceeding against you as ""intentional theft""." No, any gifts you receive are not taxable to you. In fact, losing money in a scam (as this sure sounds like to me) can even be tax-deductible if you lose enough! I wouldn't recommend accepting anything. Usually people with millions are dollars are capable of setting up their own bank accounts. "Of course. The rationale is exactly the same as always: profit is taxed. The fact that you use intermediate barter to make that profit is irrelevant. To clarify, as it seems that you think it makes a difference that no money ""changed hands"". Consider this situation: So far your cost is $10000. How will the tax authority address this? They will look at the fair market value of the barter. You got gold worth of $20000. So from their perspective, you got $20000, and immediately exchanged it into gold. What does it mean for you? That you're taxed on the $10000 gain you made on your product X (the $20000 worth of barter that you received minus the $10000 worth of work/material/expenses that you spend on producing the merchandise), and that you have $20000 basis in the gold that you now own. If in a year, when you plan to sell the gold, its price drops - you can deduct investment losses. If its price goes up - you'll have investment gain. But for the gain you're making on your product X you will pay taxes now, because that's when you realized it - sold the merchandize and received in return something else of a value." "Are you asking why you aren't entitled to money that someone gave you by mistake? I think the answer is obvious even if you don't like it. If you overpaid your taxes how would you feel if the Government said, ""Sorry, finder's keepers. It isn't OUR mistake you can't do math.""  Your best course of action is to work with the agency to see if they will work out a payment plan so it isn't a big hit all at one time. They are likely to work with you since it was their mistaken advice that got you into the situation." "I worked in the service industry for over 10 years and this came up every now and again.  Mostly in hypothetical situations.   I'm not a tax expert, but my general understanding is that it is viewed as income by the IRS if you performed a service of any kind in exchange for the money.  In other words, if you waited on the table, and they left you a gift for doing so, it is taxable.   You'll probably also find that if you pool tips with other employees or have to tip out the bartenders, cooks or dishwashers, they'll generally agree with the IRS that you clearly received a tip and want their fair share. While the concept of ""gifting"" money to others in a situation like this is intriguing, especially in the service industry, it really doesn't meet the definition of a gift in the eyes of the IRS. For it to truly be a gift, the person would have had to intend to gift you the money even if they hadn't come into your restaurant at all that night.  That clearly is not the case here." "This may be closed as not quite PF, but really ""startup"" as it's a business question.  In general, you should talk to a professional if you have this type of question, specifics like this regarding your tax code. I would expect that as a business, you will use a proper paper trail to show that money, say 1000 units of currency, came in and 900 went out. This is a service, no goods involved. The transaction nets you 100, and you track all of this. In the end you have the gross profit, and then business expenses. The gross amount, 1000, should not be the amount taxed, only the final profit." Yes, you get a refund but only in a couple of states. If you are visiting Louisiana (e.g. New Orleans), there is sales tax refund on tangible items purchased at tax-free stores and permanently removed from the United States (http://www.louisianataxfree.com) . Clothes, shoes, makeup.. these are all items you can claim a tax refund for. Alas, I believe only Louisiana and Texas (http://taxfreetexas.com/) have this, it might be good to know if you are going there. In some states (Alaska, Delaware, Montana, New Hampshire and Oregon I believe) there is no sales tax at all.  You do not pay anything at customs for gifts purchased when you leave the United States. "Daniel covered the correct way to file on the returns, I'm chiming in specifically to discuss the question of whether it could be a gift. The IRS will classify it as a tip even if the person giving it says it's a gift if a service was rendered before the gift was given. The only way that you could make a case to the IRS that it was a gift is if you have a personal relationship outside of the working environment, and the person giving the gift provides an explanation for the motivation behind the gift.  Such explanations as ""Happy Birthday"" or ""Congratulations on graduating"" or other special occasions could be gifts. But ""you did a good job, and I just want to reward you for your effort"" is not a reason someone gives a gift, and the IRS will penalize you if you do not have evidence that it was a gift rather than a tip." Most countries tax income, but not a transfer of already taxed money, so you have nothing to worry about. You need to be prepared - if asked - to proof that the money was legally earned, and that you paid taxes for the income when you originally got it. Chances are small that anyone asks though, if you are not being investigated for other reasons already. "Let's say you should have paid $4000 in taxes in a year, but you paid $5000, so you get a tax return of $1000. ""Somebody"" thinks that you should have tried to only pay $4000 in the year and get zero tax return. I hope he or she doesn't think you should pay $5000 and mess up your tax return so you get no refund.  Once the end of the tax year is there, you should do what you can to get as much tax returned as possible. On the other hand, you should also have tried to pay less during the year - obviously every dollar you paid less is a dollar less refund." Typically, a transfer of money isn't taxed in and of itself. If they send you $1000 and you send them goods, your profit is what would be taxed, not the full amount sent to you. You need to keep track of all money you spend to acquire the goods, and all money coming in, so you can declare the profit you've made as income. Your question appears to be less about personal finance, and more about running a small business. "When you say ""donate"", it usually assumes charitable donation with, in this context, tax benefit. That is not what happens in your scenario. Giving someone money with the requirement of that someone to spend that money at your shop is not donation. It is a grant. You can do that, but you won't be able to deduct this as charitable donation, but the money paid to you back would be taxable income to you. I respectfully disagree with Joe that its a wash. It is not. You give them money that you cannot deduct as an expense (as it is not business expense) or donation (as strings are attached). But you do give them the money, it is no longer yours. When they use the money to pay you back - that same money becomes your taxable income. End result: you provide service, and you're the one paying (taxes) for it. Why would you do that?"