Free products are taxable income for bloggers
January 7th, 2014 → 2:38 pm @ Carol
Linda over at MinneMom.com blog wrote what she learned from a seminar conducted by B.J. Weber of Ankeny Tax and Accounting entitled “Understanding the Tax Issues of Blogging.”
Read Linda’s entire blog post here
Taxable income to the blogger can be in many forms: sale of products from your blog, affiliate commissions, paid reviews, and free products for review. Yes, I said free products for review. If you receive products for review, or freebies from companies, you have to keep track of that as income. Even if you give the product away.
If it comes into your hands, the IRS doesn’t care what you do with it, you must claim it as income. At fair market value. That means “suggested retail price.” So that book that you’ve agreed to review, with a $17.99 price printed on it that you can pick up for $8.99 on Amazon? You have to claim $17.99 of income for it.
(If you get something in the mail that you don’t want to claim as income, immediately send it back to the sender. If you want to give something away without claiming it as income, have the prize sent directly from the company, leaving you out of the loop.)
That free vacation or cruise or daytrip that you got as a travel blogger? You need to claim the fair market value of everything in that trip: airfare, hotel, admission, incidentals that you got for free. At fair market value. If your host doesn’t give you a fair market value, you need to do your homework to find out what those freebies would have cost a paying person.
And you need to claim all of those things as income. (You may also be able to claim expenses that you incurred as part of the trip. Keep track.)
Wow, right?
Yeah, we didn’t want to hear it either.
We also got nervous at the thought of the record-keeping involved. What did you get? From whom did you get it? When did you get it? What’s the fair market value?
Keep track of your income, bloggers, even if you never receive a penny of cash.
Thanks to Linda and BJ for their tax tips, even if it’s not what bloggers wanted to hear!
Carol Topp, CPA
Need more tax tips? My book Business Tips and Taxes for Writers (or bloggers!) is full of easy-to-understand tax tips. Order a copy today.
Tags: bloggers, business deduction, tax deductions, taxes
