Work Credit but no W-2 or 1099

[Bonnie]

Customer works for local Christian School and her 3 children attend same school. Instead of paying my customer, the school issues credit against children's tuition for what she earns. She has print out of the work credit she has earned. Once the tuition is paid in full, the school then gives her a paycheck and issued a W2 for the amount they paid in cash (check). Of course with 3 children there is considerable EIC involved but no paper trail of W2 or 1099. We do have a print out of Tuition and the Work Credit. After a lengthy discussion with gentleman at IRS he seemed to feel this income should have all been reported on W2 but school is refusing to do it this way. He said under those circumstances it sounds like barter income. Any thoughts?? Should I just put it on Sch C. I'm sure IRS will question but we do have the supporting statement listing this was Work Credit. I'm thinking IRS would make school put it on W2 if they investigated it. What does everyone else think?

[Bonnie]

Anyone have any opinions on what I should do with this income????

[Matt Sova]

Income

Include it on line 21 and pay SE tax on it.

[Burke]

I think the IRS guy is on the right track. Treat as barter income. See TTB 5-10.

[veritas]

What about

code sec 117(d)

Qualified Tuition deduction?

[ChEAr$]

NOT on line 20 (other income) and certainly not on schedule c.
It is as we all recognize, like the fellow at IRS, wages.

Use the substitute wage statement for the additional amount over and above the stated w2 amount and explain it. This way it ends up on line 7 and EIC rightly calculated.