Are the products bloggers recieve for reviews taxable?
March 11th, 2013 → 9:16 am @ Carol
I have a blog that I have no intention of making money with. I have, however, written one paid post for someone else’s blog ($20). I know I will need to claim that… but, what about the products and stuff I get for free to review? Is that taxable?
Julia
Julia,
Good question!
You obviously have no profit motive for your blog, but occasionally get paid. This hobby income is reported as Other Income on your Form 1040.
The products you receive for review are taxable income. Why? Because you engaged in a business exchange. You traded your review (i.e. your time, even though it is a hobby) for a product.
Here are two experts explaining why products you review are included in your taxable income:
From Sara Hawkins, a business attorney, blog Saving for Someday comes this opinion:
Products for review – while many bloggers frequently talk about the cool products that just show up at their door, most products arrive with some expectation. The company or PR rep had to get your address or possibly exchanged emails with you regarding some expectations they may have with regard to sending you their product or service. If there has been conversation where you have agreed to try their product or service and then write about it, the brand or PR rep is sending it to you with the expectation of getting something in return. That is the fine line separating ‘random stuff dropped off by hot delivery guy’ (not taxable income) and ‘item provided for something in return’ (taxable income). If you’re sent a product for your use to help facilitate a giveaway you’ll be doing, that item you received is taxable income.
And from Gina L Gwozdz, a CPA at Gina’s Tax Tips blog, comes this explanation (in the comments section):
If a blogger receives something (money or product or service) in exchange for a review posted to their blog then this is most likely self-employment income and not a gift (gifts do not have strings attached, such as “review my product”). The income is the FMV (Fair Market Value) of the product, service or money received. Thus, it would be taxable income and there is no “gift” per se.
It does not matter if the product was solicited from the vendor or not. What matters is that you received the product, service (or money) in-exchange for doing something for them.
This could be considered barter. Barter is taxable.
I hope that helps, even if it’s not what you wanted to hear!
Carol Topp, CPA
Tags: bloggers, blogging, product reviews, taxable income
Emily Akin
11 years ago
Rats. This is definitely not what I wanted to hear. I have some serious record-keeping to catch up on before I do my 2012 taxes. I have a book review blog at https://www.tnchristianreader.blogspot.com/, if anyone should want to check it out. Thanks for the information, Carol.
Sara Hawkins
11 years ago
Hi Carol, thanks for using my discussion about product reviews.
Mihla
10 years ago
How about if we don’t have a blog, but just review books on Goodreads or Amazon? Do we still have to claim as income the book we received from the author?
Carol
10 years ago
Sounds to me like you are doing reviews as a favor to the author. You have no business; you have no profit motive. There is no income to be taxed.
Hmano
9 years ago
How is FMV of a review item determined though? If I agree to review an item, receive title to the item, but it comes with the restriction that I can’t sell it, give it away, or donate it to charity, and if I no longer want it, I have to destroy it, then it doesn’t have the same value as one that I purchase at FMV.
In the case of books, it might be an advance copy that can’t be sold or given away. Therefore, you are trading the willingness to write a review for the opportunity to read a book once, and do so before it’s available in the library. As with a library book, you’d have no rights whatsoever except to read it.
Carol
9 years ago
You brought up some good points. In the first situation, there is no market for the item (you cannot sell, it , give it, etc) so the FMV to you is zero. Same for an advance copy of a book that has no real market because it cannot be sold. It’s FMV to you is zero.
Michelle R. Wood
8 years ago
“Sounds to me like you are doing reviews as a favor to the author. You have no business; you have no profit motive. There is no income to be taxed.”
But part of the Goodreads business model is for people to sign up to get a free review copy from the author: I myself have received books in this fashion. Whenever I write a book review (be it for one I have received from the author, paid for myself, or checked out of the library), I crosspost it on both my blog, Goodreads, and Amazon. It smells questionable that the same activity should be considered barter if I perform it on my website but suddenly becomes a favor to the author when it happens on another corner of the Internet, especially two sites that receive far more traffic and which have the advantage of offering perks to reviewers.
Brenda
5 years ago
Hi, I review items I get from Amazon through their vine program. I know I have to claim the fair market value for them, but what I want to know is….do I have to pay payroll tax, plus state tax, in addition to federal tax or what? I am doing this as a hobby, and if I accept a bigger ticket item and have to pay all those taxes I may as well go buy it at the store and not have to write a review on it, and retain all the warranties that I lose since I got it supposedly for free. If I have to pay the 12% payroll tax and I think our state IL is like 6% and then federal tax which is pretty high since my husband makes a good living, I could end up paying like 50% of the fair market value in taxes. Thanks
Carol
4 years ago
Since you say this is a hobby, but not a business, you would report the income as “other Income.” Other Income is taxable for income tax (federal, state and local), but not subject to self-employment tax (which is FICA and Medicare for self-employed persons).
It is entirely possible that those “free” items end up costing you in time and taxes more than they are worth to you.