Under which condition can a taxpayer not adjust for a reward received from a crime hotline?

The reasoning behind the assertion that a taxpayer cannot adjust for a reward received from a crime hotline if they are an employee of the hotline is rooted in the nature of employment and taxable income. Rewards received by someone who is an employee of the hotline are considered compensation for services performed. In such cases, the payments are fully taxable as wages or salary, and the employee cannot claim deductions against that income for receiving such a reward.

In this scenario, employment with the hotline creates a direct link between the individual's role and their receipt of the reward. As an employee, they are expected to fulfill their duties and responsibilities, which may include receiving tips or rewards that are part of their job function. This differs from individuals who are not employed by the hotline; for them, rewards might be viewed differently, potentially allowing for certain adjustments depending on the situation.

By contrast, rewards exceeding a specific amount, such as $600, payments from non-residents living outside of California, or even rewards from non-government authorized sources might carry different tax implications but do not restrict the ability to adjust based solely on employee status. Therefore, being employed by the hotline restricts the ability to classify the reward in a way that allows for adjustments in the taxpayers' income calculation.