Another question we hear often is “If a company gives me something for doing a review for them, do I have to report it on my tax return?” For any established blogger this can be a real issue. When you start adding up everything that you’ve received for doing reviews…trips, electronics, gift cards, appliances, etc. it may become a significant amount.
Tax reporting for bartering is pretty straight forward. The quick, unwanted answer to the question, is: Yes, the IRS does expect you to report the “fair market value” of goods or services received in a business related exchange. And what is “fair market value”? Basically the price you would have paid for it if you bought it off the company’s shelf, or what they would have sold it for to a regular customer.
I know this kind of takes the glam out of being a blogger, but that’s the IRS’ specialty…putting a damper on things. Did you know that until the early 1900s there was no income tax in the United States at all!? Nevermind, we won’t go down that road…
Know this about bartering: it only applies to business transactions. So if you aren’t technically providing a business related service or good in return, you may be able to justify not having to report it on the tax return. Let us know if you would like to bounce your situation off of us.
Remember, Mazuma doesn’t charge by the hour…that’s so old fashioned.