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now, how does teh above affect a DM? if he is diving for free fills and boat trip does he get taxed on that?
The references I found on a quick look is that "tipped employees" fall into the exception to the minimum wage. At least in theory, this includes divemasters. I could probably find a more specific answer by looking at the regs - but it's late and I have a lot to do yet tonight to get ready to travel to my jump off point for Cozumel right after work tomorrow.
In the US, the divemaster should be reporting and being taxed on whatever s/he receives as payment (or barter) for services. That would probably include recreational free fills, but not fills which are necessary to to the job. Tips are required to be reported.
As to whether any divemasters actually report any of this - my guess is virtually none of them do. When I worked as a tax preparer when my daughter was little I don't recall a single tipped employee reporting anything above what the employer reported on their wage statement - or below (which they are permitted to do if they have records to back it up).