What is it called when a person agrees to a low wage and gets the rest in cash and goods or services?

Question

I want to know what it would be called according to federal law.

Answer 1

It's called "Barter Income."  

The fair market value of the goods and services received are treated as if they were paid in cash and are fully taxable.

It's perfectly legal.  You are REQUIRED by law to report the income.  If you are an employee, your employer is REQUIRED by law to include the value of the goods and services provided to you in Box 1 of your Form W-2 as if they had been paid to you in cash or a paycheck.

I knew an old-school country doctor a few years ago who would often accept produce, crops, livestock, house repairs, furniture, etc. from some of her patients as payment for her services.  She reported the FMV of the goods and services on her tax return as income.