In your federal Form-1040 filing example, it could be problematic to subtract the entire gross pay [76817] as redeemed lawful money (assuming this is a W-2 employee). For the simple fact the employee would not have the full $76817 in checks to redeem. At a minimum, deductions for Medicare & Social Security would be withheld from the paycheck before the worker could make a demand.

Seems safer to use the total of redeemed checks for the year [say $64413] as shown below. This would result in $12404 of income yet still no taxable income and no federal income tax due.

I guess you could make the argument of "redeemed" - that Notice & Demand to US Treasury for all transactions demanded in lawful money supersedes the W4 employment contract of the "employee" working for "employer". But I'm not so sure.

Name: 1040LM.jpg Views: 244 Size: 55.2 KB