Thanks for this. I have been telling people this for years and been told “no way.” I’m not an accountant, only relaying the feedback from my own accountant, so this article will be really helpful to again encourage people to see their financial and business advisors and set up systems. As a freelancer or business owner you have to switch your thinking of the definition of income from “what my boss pays me” to “what comes in to my business.” I think the big change for people has to be getting organized with good recordkeeping. Lots of things are deductible to offset any income, but it’s a matter of keeping good records.

What if you don’t review it? If it was just swag/gift and you don’t mention it on the blog, does that still count as income?

What Deb said, but also find an accountant and do as he or she advises, knowing that this is the person who will back you up should you get audited.

I know one place my record keeping needs to be improved is getting receipts or some sort of documentation when I pass review items along or donate them. That is a way to offset to expense of something you reviewed but didn’t keep.

That’s a lot of paperwork. I’d think this could be a game changer for many bloggers. Politicians should read this too. I appreciate the information, even if it makes me groan.

I don’t actually know why this comes as a surprise to anyone. As for claiming housing for your blogging? Most likely not allowed. There are VERY specific rules for deducting for a “home office” and, even then, you certainly can’t deduct a large portion of your housing expenses.

I still think if someone has paid for something for you and it is reported as income on someone else’s books, you have a good argument that tax has been paid on the value of that service. If it’s donated to you straight from somewhere, I think you have a taxable transaction.

holy cow i so do not have a record of everything i have been provided and all my reciepts that i got from the companies listed the item as $0 so how do i record that if they arent recording the price or value?

$25 huh?
Good to know, but I ask the same thing one above.
What if stuff shows up at your door and you didn’t request it, and you CERTAINLY aren’t going to write about it??

That’s my question, Carissa. The first box says “Anything received as compensation…” so I’d like to know what constitutes compensation. If I get an unsolicited item in the mail because I have a PO Box listed as my business address, I’m not expected to report that, am I? Going on a trip seems more cut-and-dry; you’re being compensated for your travel, meals, etc. But if I travel to a local Dunkin Donuts on an invitation and they hand me a gift card or coupon book on the way out–do I claim that? Does it matter if it’s blogged about or not?

This article makes some very good points; however, it is rather misleading in itself as it does not address the deductible expenses bloggers have. It would be beneficial if you followed up with another addressing the expense side of running our blogging “business” and what are some deductible expenses. I can’t blog without an internet connection, hosting fees, my computer, updated software, a camera to photograph review items, etc.

Like Deb above, I have been telling people this for years and getting the “well my tax person says…” or “there was this tax attorney at [insert blogging conference here] who said…” followed by the $600 number (the previous threshold for a 1099). Mostly because people don’t *want* to believe that’s true.

The reason tech bloggers either return review units or pass them along to someone else is because of the tax issue. So they’ve dealt with it for years. Now the other bloggers are starting to wake up to this and seem surprised.

“Income” is not always monetary. If it were? The easiest tax dodge in the world would be buying stuff like gold and “giving it” to someone else. The disconnect is that people think of “income” as money. It’s anything of value that you receive. I’m fairly sure that anyone above or questioning it has seen a television game show or entered a sweepstakes that says “all taxes are the responsibility of the winner.” When those people won cars on The Price is Right? They had to pay a prize taxes. So winning a $40,000 car isn’t so great a deal if you don’t make enough money to pay the taxes on it (15% is the lowest tax bracket iirc.)

The thing is – what people seem to try and do is create some sort of logic circle for why it’s okay that they don’t report it. All I can say is “if you’re a blogger and you write about stuff you get? Expect that if the IRS ever audits you, they’re going to be looking at what you wrote.”

Great article Cecily. Hope it gets passed around thoroughly.

@Debbie, our CPA looked around and found no specific tax law for bloggers or product reviewers, but after a long discussion and look at my records {I broke things down into review items, “appreciation” gift certs, “sample” products, donated to Goodwill, etc.}, he said everything is taxable, including donated items. He also said it would be better to return unsolicited items to the sender so you don’t get stuck paying taxes on it.

I’m an accountant, and I think I can clear up a couple of things here.

I know I’ve read the portion about food bloggers before, in almost verbatim. I’m not sure where they are getting 1/6th of a meal, as it would fall under product research.

As far as the IRS is concerned, income is income, regardless of who you are servicing (the reader/corporation dispute mentioned above).

Anything you receive as compensation in the form of cash, credit, product, service, etc. is income. The IRS does not care if you receive $50 or $50 worth of roll-up ballet flats. It’s still $50.

There is also no written $25 rule- while it sounds more feasible than the $600 rumor. Sounds better than reporting a refrigerator magnet, but again, the IRS doesn’t care if you receive one $500 check or 20 $25 ones.

It is perfectly acceptable to ask for a tax stipend on any prize to offset your cost.

I still laugh at the ‘$600′ urban legend. I once had a couple come in to get their taxes done with 50 W-2 forms- 25 each. They had heard the $600 rumor and worked until they made $600 at each place so they wouldn’t owe taxes. They would have gotten a full refund + several thousand more as they qualified for Earned Income credit, so it didn’t matter. However, we charged $10 per W-2, so it cost them a small fortune to file!

I have heard argued, and I have no clue if this is “valid” or not, that as a review blogger the NEW product I receive is purely for work and what I receive a the end of the period used for review, the now USED version is what I actually get to keep. Did that sentence make sense? I’ve heard you can claim the fair market value of what the product is worth after it has been used for the sake of your service. In the scenario of a bag of chips, if you eat the chips to provide the service, you are essentially left with no compensation. Thoughts??